HONG KONG, Dec. 27, 2013 /PRNewswire/ -- Hong Wei (Asia) Holdings Company Limited ("Hong Wei", and together with its subsidiaries, the "Group"; stock code: 8191), a particleboards provider in the PRC, announced today the details of its plan to list on the Growth Enterprise Market ("GEM") of The Stock Exchange of Hong Kong Limited ("SEHK").
A total of 177,780,000 shares will be offered by way of placing ("Placing"). The placing price per Placing Share ("Placing Price") is HK$0.39.Dealing of Shares on GEM of SEHK is expected to commence on 8 January 2014 (Wed).
The aggregated net proceeds from the Placing (after deduction of listing related expenses) will be approximately HK$54 million. Hong Wei intends to apply approximately HK$30 million (or approximately 56% of the net proceeds) to partially repay a RMB32 million bank loan provided by Agricultural Bank of China Limited due in March 2014 designated for general working capital use; approximately 9% to expand its product range; approximately 5% to strengthen and expand their sales network across the PRC; approximately 5% to expand its supplier base for the supply of residual wood; approximately 11% to enhance its product research and development; approximately 5% to strengthen its brand recognition; and approximately 9% for general working capital purpose.
Baron Global Financial Services Limited is the Sole Sponsor. Baron Global Financial Services Limited and Convoy Investment Services Limited are Joint Bookrunners. Convoy Investment Services Limited, Ping An Securities Limited, Quam Securities Company Limited and Tanrich Securities Company Limited are Joint Lead Managers. Convoy Investment Services Limited, Quam Securities Company Limited and Tanrich Securities Company Limited are Underwriters, Hong Wei is principally engaged in the manufacturing and sales of particleboards. Particleboards are used primarily in the manufacture of furniture, flooring panels, decoration and construction materials, and are made with raw materials such as undersized log, wood branches and agriculture and forestry residues, and are hence considered to be environmentally friendly and sources saving reconstituted wood-based panels. The Group's customers are mainly home or office furniture manufacturers, sport equipment manufacturers and wood-based panel processors and traders from the Pearl River Delta economic region, the Yangtze River Delta economic region and Fujian province. For the year ended 31 December 2011 and 2012, the Group recorded revenue of HK$153.1 million and HK$163.0 million respectively, representing a GAGR of 6.5%. The net profit in the same period was HK$8.4 million and HK$18.0 million respectively, representing a GAGR of 114% over the period.
Scaled Production Capacity and Advanced Products
The Group's production base is strategically located in Renhua county, Shaoguan city which possesses abundant wood resources. It has two original production lines, and a new production line completed in September 2013. Its original production lines have an aggregate annual particleboard production capacity of approximately 140,000 m3. Its new production line, which has commenced full production in December 2013, has an approved annual production capacity of approximately 220,000 m3.
The new production line, which is mainly imported from Dieffenbacher, a world leading supplier of wood-based panel press system, is equipped with advanced technology and is more efficient, particularly in terms of energy and raw material savings, enabling the Group to produce particleboards at lower cost but with better and more stable quality. The products from the new production line are more environmentally friendly and could comply with all the Particleboard PRC GB Standards and Particleboard International Standards. The Group is also a certified manufacturer of the Forest Stewardship Council (FSC), which labels its particleboards originate from well-managed forests, controlled sources and reclaimed materials.
According to the Shenzhen Zhongshang Report, as at 30 June 2013, there are only 11 particleboard manufacturers in the PRC, including the Group, that have installed or are installing Dieffenbacher's press systems; and there are only 14 particleboard production lines in the PRC with an annual production capacity of 200,000 m3 or above.
Thriving Industry and Favourable Government Policies
According to the Shenzhen Zhongshang Report, the per capita annual consumer expenditure on wood-based furniture in the PRC has increased from approximately RMB106 in 2008 to approximately RMB250 in 2012, representing a CAGR of approximately 23.9%. Particleboard, being a key material for wood-based furniture, is hence boosted to grow. The annual apparent consumption of particleboards in the PRC increased at a CAGR of approximately 9.2%, from approximately 9.29 million m3 in 2008 to approximately 13.21 million m3 in 2012.
Hong Wei has also been approved by the PRC government to enjoy multiple preferential tax and subsidy policies, including the preferential policy of exemption from custom duties for the import of self-use equipment, as well as tax refund preferential policy.
