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Offers 90,000,000 Shares Ranging from HK$1.00 and HK$1.40 per Share
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HONG KONG, Nov 25, 2013 - (ACN Newswire) - Yi Hua Department Store Holdings Limited ("Yi Hua Department Store" or the "Group"), the sixth-largest mixed retailer in Guangdong Province, the PRC, in 2012 today announced the details of its proposed listing on the Main Board of The Stock Exchange of Hong Kong Limited ("HKSE").
 | | Yi Hua Department Store Holdings Limited Announces Details of Proposed Listing on the Main Board of HKSE |
Highlights:
-- Yi Hua Department Store is ranked the sixth-largest mixed retailer in Guangdong Province, the PRC, in 2012 and is the only one of such top ten mixed retailers in Guangdong Province which focuses exclusively on second-tier and third-tier cities in Guangdong Province
-- With an 18-year history, "Yihua Department Store" has become a well-known retail brand in Guangdong Province and the Group has broadened its income sources by operating four sections, including department store section, supermarket section, electrical appliances section and furniture section
-- The Group owns 13 stores in Guangdong and Shandong Provinces, the PRC and targets the middle and upper income segments. It is in the process of opening two new stores and one new store in 2014 and 2015 respectively and is expanding its network to Jiangsu Province
-- Stronger bargaining power with concessionaires through greater economies of scale with its network of Yihua Department Store
-- For the three years ended 31 December 2012, gross profit increased from approximately RMB239,808,000 to RMB326,686,000, representing a CAGR of 16.7%
Offer Details
Yi Hua Department Store intends to offer a total of 90,000,000 Shares (subject to offer size adjustment option or over-allotment option ("Adjustment Option")), of which 90% or 81,000,000 Shares are for the Placing and 10% or 9,000,000 Shares are for the Public Offer. The offer price range is between HK$1.00 and HK$1.40 per Share. Assuming the Adjustment Option is not exercised, the total offer size is estimated at between approximately HK$90,000,000 and HK$126,000,000.
The Public Offer will begin at 9:00 a.m. on 26 November 2013 (Tuesday) and end at noon on 29 November 2013 (Friday). The final offer price and placing results will be announced on 10 December 2013 (Tuesday). Trading of Yi Hua Department Store's Shares will commence on the Main Board of HKSE at 9:00 a.m. on 11 December 2013 (Wednesday) under the stock code 2213. The Shares will be traded in board lots of 2,000 shares.
Kingsway Capital Limited is the Sponsor. Kingsway Financial Services Group Limited and Upbest Securities Company Limited are the Joint Bookrunners and Joint Lead Managers.
Corporate Highlights
The sixth-largest mixed retailer in Guangdong Province, the PRC, in 2012 targeting second & third-tier cities, and enjoys cost efficiencies
The Group is principally operating in Guangdong Province and Shandong Province. Its retail network consists of 13 stores, comprising 10 department stores and 3 community stores covering over 279,770 sq.m. of retail space. The Group targets middle and upper income segments, and avoid to establish our stores in the big cities like municipalities and provincial capitals. The selected strategic locations enables the Group to enjoy a relatively competitive start-up cost initially, and subsequently to capture opportunities offered in the location by the developing nascent market, growth in population, the ever-improving quality and standards of livings .
Four major sections to broaden income sources and provide a one-stop shopping experience
The Group's stores are located in prime locations in the second-tier and third-tier cities in Guangdong Province. Yi Hua Department Store provides a one-stop shopping experience and forms an integrated trendy department store with dining, entertainment and leisure service through four different sections, including Yihua Department Store, Yihua Lejia Supermarket, Yihua Sihai Electrical Appliance Centre and the new furniture section operating under the "Yihua Shijia" brand starting from 2013. By adopting different business models, the Group is able to adjust its model configuration to suit the local situation and thereby increase profits.
Stronger bargaining power with direct suppliers and concessionaires
Thanks to the strong economies of scale of the Group's network, as well as continuous promotional activities and successful merchandising strategy adjusted from time to time, the Group has strong bargaining power with its direct suppliers and concessionaires, and also enjoys cost efficiency. During the track record period, the cost of goods supplied by direct suppliers has decreased. For the three years ended 31 December 2012, direct sales margin increased from 12.3% to 16.0%, and commissions as a percentage of concessionaires sales rose from 15.9% to 17.3%. Gross profit increased from approximately RMB 239,808,000 to RMB 326,686,000, representing a CAGR of 16.7%.
Future Development
The GDP in Guangdong Province and the PRC are increasing year after year and creating growth opportunities for retail markets. Euromonitor believes that ongoing urbanisation, rising per capita disposable income and chain stores penetrating into lower tier cities and wealthy rural areas will push up mixed retail sales value in the PRC at a CAGR of 12.5% from 2013 to 2017.
To capture opportunities in the future, the Group is accelerating expansion by opening more new stores and expanding its network beyond Guangdong Province to other provinces. In 2013, five new stores were opened, and the Group is in the process of opening two new stores and one new store in Zhenjiang in Jiangsu Province, Enping in Guangdong Province and Tai'an in Shandong Province in 2014 and 2015, respectively. Besides, the Group has established its new furniture section in the Zhongshan, Yangjiang and Jiangmen stores under the "Yihua Shijia" brand. It also plans to further expand the furniture section to other new stores aiming to leverage the strong customer flow of its quality network for cross-sale opportunities.
Mr Chen Jianren, Chairman and Executive Director of Yi Hua Department Store, said, "Relying on the reputable brand image and 18 years of operational experience of department stores, I am pleased to lead the Group to achieve a new milestone. Listing in Hong Kong not only enhances our capital foundation, but also strengthens our branding and reputation, enabling us to attract more well-known mid to high-end consumer brands to our stores, as well as to increase the confidence in and recognition of the Group by consumers, direct suppliers and concessionaries."
"Looking ahead, we will strive to expand our retail network in the PRC and upgrade our existing IT system to further improve operational efficiency and service quality, in order to generate stable and promising returns in the long run."
Financial Performance
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Year ended 31 December Five months ended 31 May
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2010 2011 2012 2013
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Revenue
(RMB million) 605.2 715.1 678.9 302.4
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Gross Profit
(RMB million) 239.8 310.8 326.7 149.9
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Gross
profit margin 39.6% 43.5% 48.1% 49.6%
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Net Profit
(RMB million) 30.5 49.2 43.6 13.6
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Net profit margin 5.0% 6.9% 6.4% 4.5%
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Offer Structure
Number of Offer Shares: 90,000,000 shares (subject to Adjustment Option)
Offer Arrangements:
Number of Placing Shares
90% 81,000,000 shares (subject to reallocation and Adjustment Option)
Number of Public Offer Shares
10% 9,000,000 shares (subject to reallocation)
Offer Price Range: HK$1.00 to HK$1.40 per share
Offer Size: HK$90,000,000 and HK$26,000,000 (subject to Adjustment Option)
Board lot Size: 2,000 shares
Stock code: 2213
Use of Proceeds
Assuming the over-allotment option is not exercised and the Offer Price is fixed at HK$1.20 per share (being the mid-point of the indicative range of the Offer Price), net proceeds are estimated to be approximately HK$84,000,000 and will be used as follows:
-- For newly opened department store in Yangjiang - 12%
-- For opening of new department store in Zhenjiang - 43%
-- For opening of a new department store in Enping - 28%
-- For upgrading existing information and technology systems - 7%
-- General working capital - 10%
Contact:
Strategic Financial Relations Limited
Vicky Lee +852 2864 4834/ 9471 2009 vicky.lee@sprg.com.hk
Angela Ng +852 2864 4855/ 9220 0381 angela.ng@sprg.com.hk
Sadie Lam +852 2864 4861/ 9838 9016 sadie.lam@sprg.com.hk
Fax: +852 2527 1196
Website: http://www.sprg.asia/hk
Topic: Press release summary
Source: Yi Hua Department Store Holdings Limited
Sectors: Daily Finance, Daily News
https://www.acnnewswire.com
From the Asia Corporate News Network
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