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Sunday, 2 July 2017, 09:08 HKT/SGT
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Source: Win Win Way Construction Holdings Ltd.
Win Win Way Construction Announces Proposed Listing on the HKEX Main Board
- Global Offering of 128,000,000 Shares
- Not More than HK$1.0 per Offer Share And Expected to Be Not Less than HK$0.8 per Offer Share

HONG KONG, July 2, 2017 - (ACN Newswire) - Win Win Way Construction Holdings Ltd. ("Win Win Way Construction" or "the Group") is a construction company principally providing foundation works and ancillary services, as well as general building works in Hong Kong. The Group was one of the two foundation companies which were capable of performing frictional pre-bored H-piling works in Hong Kong. This piling technology is more environmental-friendly compared to others as it generates less vibration and noise during operation. The Group's Hong Kong Public Offer begins at 9:00 a.m. today and will end at 12:00 noon on Wednesday, 5 July, 2017. After deducting underwriting fees and estimated total expenses paid and payable, net proceeds to be received by the Group from the Global Offering are estimated to be approximately HK$55.8 million

Win Win Way Construction Holdings Ltd. Announces Details of the Proposed Listing on the Main Board of The Stock Exchange of Hong Kong Limited

Offerings Details

The Group intends to offer a total of 128,000,000 Offer Shares under the Global Offering (subject to the Over-allotment option), of which 90% or 115,200,000 International Offer Shares are for International Offer (subject to adjustment and the Over-allotment Option), the remaining 10% or 12,800,000 Hong Kong Offer Shares (subject to adjustment) are for Hong Kong Public Offer. The indicative Offer Price will range between HK$0.8 and HK$1.0 per Offer Share. After deducting underwriting fees and estimated total expenses paid and payable, net proceeds from the Global Offering are expected to be approximately HK$55.8 million.

The Hong Kong Public Offer begins and will end at 12:00 noon on Wednesday, 5 July, 2017. The final Offer Price and allotment results are to be announced on Friday, 14 July, 2017. Dealing of shares is expected to commence on the Main Board of The Stock Exchange of Hong Kong Limited ("SEHK") on Monday, 17 July, 2017 under the stock code of 994. The shares are to be traded in board lots of 4,000 shares.

KGI Capital Asia Limited is the Sole Sponsor and Sole Global Coordinator, and together with Great Roc Capital Securities Limited and VMS Securities Limited, are the Joint Bookrunners and the Joint Lead Managers of the Listing.

Investment Highlights

Well-established reputation and proven track record
Founded in 1999, the Group has more than 17 years of experience in the construction industry in Hong Kong. It undertook a number of foundation works and ancillary services and general building works projects of various natures, including commercial complexes, hospitals, hotels, housing estates, schools, industrial buildings and private residential buildings in Hong Kong. Some projects the Group completed over the years include (i) the Former Police Married Quarters (known as the PMQ) on Hollywood Road; (ii) the Central Police Station conservation and revitalisation projects; (iii) a shopping and hotel complex re-modelling project in Tsim Sha Tsui; (iv) a redevelopment of school in Wan Chai; and (v) a residential development in Kennedy Road. During the Track Record Period, the Group completed 61 projects involving foundation works and ancillary services, and three projects involving general building works. During the Track Record Period, the Group's total revenue from these two types of construction works amounted to approximately HK$1,182.1 million and HK$610.3 million, respectively. As at the Latest Practicable Date, the aggregate contract sum for the Group's contracts on hand (including contracts in progress and contracts of which its work has yet to commence) amounted to approximately HK$2,035.3 million.

Possesses a wide range of qualifications to capture business opportunities
The Group was first registered as specialist contractor in the categories of foundation, site formation and demolition and as general building contractor with the Buildings Department in Hong Kong in 2004. It is also on the list of approved suppliers of materials and specialist contractors for public works (Group II of the "Land Piling" category for minipile, steel H-pile and rock-socketed steel H-pile in pre-bored hole) with the Development Bureau. In addition, the Group is on the list of registered subcontractor with the Construction Industry Council with trade specialty in foundation, demolition and other general civil works.

Possesses advanced and environmental-friendly piling technical knowhow
According to the CIC Report, as at 31 December 2016, the Group was one of the two foundation companies which were capable of performing frictional pre-bored H-piling works in Hong Kong. This piling technology is more environmental-friendly compared to others as it generates less vibration and noise during operation. During the Track Record Period, the Group completed four out of the five foundation projects which involved frictional pre-bored H-piling works in Hong Kong, namely the Former Police Married Quarters (known as the PMQ) on Hollywood Road, the foundation and ELS work for Central Police Station conservation and revitalisation project, a hotel redevelopment project in Wong Nai Chung Road and a hotel project in Staunton Street.

While the Group's revenue from foundation projects involving frictional pre-bored H-piling works amounted to approximately HK$127.8 million, representing approximately 7.1% of its total revenue during the Track Record Period, the Group believes that such new piling technique is suitable for foundation projects in certain designated areas in Hong Kong. To the extent that such a demand arises in the market, given that the Group is one of the only two market players in Hong Kong with such capability, it has a high chance of being invited to participate in the tendering process and such projects may be awarded to it. In addition, the Group believes that as the industry becomes increasingly concerned with environmental protection, its capability of performing frictional pre-bored H-piling works will contribute to the growth of its business.

Self-owned machinery with in-house modification capability
Most of the works involved in the Group's construction projects require the use of specialized machinery and equipment. The Group has been investing in acquiring a broad range of machinery and equipment. The Group believes that its investment in such machinery and equipment has placed it in a strong position to proactively exploit market opportunities with more flexibility and to compete cost-effectively for foundation projects of different sizes. The Group's direct control over machinery and equipment also allows it to act more quickly when opportunities arise without having to rely on leasing from external parties.

Established long-term relationships with diversified customers, subcontractors and suppliers
The Group has established stable business relationships with major customers and its longest standing customer has over seven years of business relationship with it. Among its five largest customers during the Track Record Period, most of them are active market participants in the construction industry in Hong Kong, and the Group has been providing services to them for an average period of over four years. The Group has also established a diversified customer base in both private and public sector, including major property developers, construction companies and commercial enterprises, as well as general works main contractors undertaking construction projects from the Hong Kong Government or public body.

The Group's stable relationship with its major subcontractors allows it to ensure their quality of works. As at the Latest Practicable Date, the Group had approximately 40 subcontractors on its approved list of subcontractors and the longest standing subcontractor has over nine years of business relationship with the Group.

The Group has also established a stable business relationship with its major suppliers and its longest standing supplier has over 13 years of business relationship with the Group. These suppliers supplied a wide range of construction materials to the Group. The Group has been working with its five largest suppliers during the Track Record Period for an average period of over five years; long-term business relationships ensure the stable supply of construction materials.

An experienced management team and long-serving staff
The Group has an experienced and dedicated management team with many years of operational expertise and in-depth understanding of the construction industry in Hong Kong, which allows it to anticipate and capture market opportunities when formulating its positioning and development strategies. Most of its Executive Directors have been with the Group for more than 10 years and they comprise a group of highly experienced individuals, all of whom have more than 20 years of experience in the construction industry in Hong Kong. The Group's Executive Directors have established close business relationships with its customers, subcontractors and suppliers. In addition, the Group's technical senior staff is equipped with technical knowhow and practical skills and experience, with a majority of them worked for more than 20 years in the construction industry in Hong Kong.

Industry Potential

Market drivers of foundation and general building works industry in Hong Kong includes mega public infrastructure projects by Hong Kong Government, high-rise buildings and skyscrapers in Hong Kong, increasing residential property projects and the rebuilding of old buildings in Hong Kong.

According to the CIC Report, the gross output value of construction works performed by main contractors in Hong Kong was HK$236.4 billion in 2016; it is expected to register a CAGR of 7.3% reaching HK$336.6 billion by 2021. For Hong Kong's foundation works performed by main contractors, it is expected to reach HK$24.0 billion in 2021 from HK$17.3 billion in 2016, representing a CAGR of 6.8%.

Growth Strategies

The Group's principal business objective is to achieve sustainable growth in current business and to strengthen capability to capture more business opportunities by strengthening its Hong Kong market position to capture more sizeable and profitable projects, Acquiring additional machinery and equipment to upgrade and replace some of its aged machinery, as well as strengthening capital base for the issue of surety bonds.

In view of the growth prospects for both public and private development projects, the Group intends to expand its business capacity and scale to strengthen market position in Hong Kong and to capture more sizeable and profitable projects. With proven track record and wide range of qualifications, the Group believes that it can capture such opportunities and take an active part in the foundation works and ancillary services, as well as the general building works required for such projects. The Group intends to strengthen its Hong Kong market position and further diversify its customer base by attracting works from more private residential developers.

The Group intends to acquire additional machinery and equipment, while upgrading and replacing some of its aged machinery including pumps, crawler cranes and piling rigs, to enhance its technical ability and to strengthen its capability to cope with different needs and requirements of different customers and different project conditions.

Additionally, the Group intends to strengthen its capital base to support more capital intensive projects. It is common practice for construction projects in Hong Kong that contractors are required to take out surety bonds which usually amount to 10.0% of the total contract sum. The Group intends to use a portion of its net proceeds from the Global Offering to satisfy the amount of bank deposits required for the issue of surety bonds for future contracts. This will enable it to undertake more projects and projects of larger contract sum. The Group also believes that by expanding capacity and scale, it will be able to undertake projects of more sizeable scale and broaden customer base by meeting the pre-qualifications of tenders prescribed by potential customers.

Use of net proceeds
Assuming an Offer Price of HK$0.9 per Share (being the mid-point of the proposed Offer Price range), the net proceeds from the Global Offering, after deducting underwriting fees and estimated total expenses paid and payable, are estimated to be approximately HK$55.8 million. The Group intends to use the net proceeds as follows:

Uses / Amount(HK$'million) / Percentage(%)
To strengthen Hong Kong market position to capture profitable projects / 19.5 / 35.0%
Financing for the issue of surety bonds for future projects / 19.5 / 35.0%
To acquire additional machinery and equipment to upgrade and replace some of the aged machinery / 11.2 / 20.0%
General working capital / 5.6 / 10.0%
Total / 55.8 / 100%

Financial Performance
HK$'000	              Year ended 31 December
                     2014     2015       2016
Revenue             448,719   628,732	 715,107
Gross Profit        89,942    119,725    126,534
Adjusted Profit*    44,657    61,099	 61,453
* Note: Including listing expenses, profit for the year ended 31 December 2015 and 2016 would be HK$54,327,000 and HK$42,137,000 respectively.

HK$'000	                     Year ended/As at 31 December
	                        2014 	2015	2016
Cash and Cash Equivalent	13,706	13,804	19,501 
Net Asset	                174,370	227,135	125,864
Net Debt to Equity Ratio (%)	22.2	28.1	21.0
Return on Equity (%)	        25.6	23.9	33.5
Return on Total Assets (%)	11.8	12.4	12.4

About Win Win Way Construction Holdings Ltd.
Founded in 1999, Win Win Way Construction Holdings Ltd. is a construction company principally providing foundation works and ancillary services, as well as general building works in Hong Kong. The Group has more than 17 years of experience in the construction industry in Hong Kong, undertaking projects of various natures, including commercial complexes, hospitals, hotels, housing estates, schools, industrial buildings and private residential buildings. According to the CIC Report, the Group is one of the two foundation companies which were capable of performing frictional pre-bored H-piling works in Hong Kong. This piling technology is more environmental-friendly compared to others as it generates less vibration and noise during operation and is suitable for foundation projects in certain designated areas in Hong Kong.


Topic: Press release summary
Source: Win Win Way Construction Holdings Ltd.

Sectors: Daily Finance, Daily News
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