Hong Kong glass firm Biel, supplier to Apple and Samsung, revives US$2.5 billion IPO plan, expects surge in demand for 5G devices

Biel Crystal Manufactory, whose touch-screen cover glass is used in one out of every two smartphones sold globally, has revived plans for an initial public offering (IPO) and aims to raise between US$2 billion and US$2.5 billion in Hong Kong or mainland China next year.

The Hong Kong-based manufacturer has restarted the listing process as orders for smartphones recover globally after a slowdown in the first two quarters caused by the coronavirus pandemic. Biel put its IPO on hold in 2018 to avoid listing in a stock market badly hit by rising US interest rates and an escalating trade war between China and the United States.

"Even though we are not in any urgent need of fresh capital, a listing status will help our name and our business," Yeung Kin-man, Biel's founder and chairman, told the Post in a phone interview. "We had strong orders for 5G [fifth-generation Internet] phones and foldable phones last year, but sales were hit, mainly in the second quarter this year, amid the global lockdown," he said, adding that he believed sales would bounce back starting in the second half of 2020.

Yeung and his wife Lam Wai-ying own a 51,000 sq ft mansion on No. 1 & 3 Pollock's Path on The Peak in Hong Kong. They were ranked 10th on Forbes' 2020 Hong Kong richest list, with a total wealth of US$8 billion.

Hong Kong hosted 64 new stock listings in the first half this year, allowing mostly mainland companies to raise HK$87.5 billion (US$11.3 billion) in capital from investors, according to data compiled by accounting firm PwC. That's an about 22.3 per cent increase in sum over the same period in 2019, according to Refinitiv.

Floating the company will enhance Biel's corporate governance standards and make it easier for it to attract talent, said Ronald Sze, the company's chief executive. He said an IPO will also increase recognition and strengthen business expansion.

"We aim to list next year, and plan to raise US$2 billion to US$2.5 billion. We are considering Hong Kong or mainland Chinese markets as the listing venue," said Sze, a former senior partner in charge of KPMG China's southern region, who was enlisted to facilitate the listing as well as business expansion.

"Hong Kong is an attractive listing venue due to its free capital flow. Mainland markets are not bad either, taking into account that our operations are in China. Our key competitor [Lens Technology] also chose [Shenzhen] as the listing venue," he said. "The plan is subject to market sentiment, but the stock markets are performing well right now."

The markets in Hong Kong and mainland China have been on fire lately, and a steady stream of IPOs could prolong a liquidity-fuelled rally in local stocks. The Hang Seng Index powered its way into a bull market this week, after less than four months in bear territory. Over the past nine sessions, the index has risen about 8 per cent, while the Shanghai Composite Index has surged 16.5 per cent.

Biel is in the process of picking investment banks as listing arrangers, he added.

Founded in 1987, the company provides optical components for luxury watches and other gadgets as well. It has 110,000 workers, and plans to increase this number to 130,000 in anticipation of growing demand for 5G-enabled devices.

Biel has manufacturing facilities mainly in Huizhou and Shenzhen, and its total output last year amounted to about 40 billion yuan (US$5.7 billion).

In July 2019, it launched its fourth manufacturing plant in Huizhou for a total investment of 5 billion yuan. At 320,000 square metres, it is one of Asia's largest manufacturing plants. "The size of each floor is bigger than four football fields," Yeung said.

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Sze declined to identify the list of clients, but it is understood that Biel supplies glass components to customers such as Apple, Samsung, Huawei and Oppo. In fact, its decision to revive its IPO comes as Apple's shares hit a record high in New York on Tuesday. The iPhone maker is seeking to raise its manufacturing capacity for the next 12 months.

Global smartphone shipments will fall by 15 per cent to 17 per cent in 2020, following a decline of 4 per cent and 2 per cent in 2018 and 2019, respectively, Fitch Ratings said in a report on June 23.

Consumers, affected by a surge in unemployment and lower disposable incomes, were likely to delay discretionary spending, it said. But it expected demand to recover strongly in 2021, as 5G is rolled out in developed and some emerging markets, once economies fully reopen.

This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2020 South China Morning Post Publishers Ltd. All rights reserved.

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