SINOMAX Announces Details of its Proposed Listing on the Main Board of the Hong Kong Stock Exchange

Jun 29, 2014 17:00 JST

Source: Sinomax Group Limited

Global Offering of 750 Million Shares Ranging from HK$1.06 to HK$1.43 per Share

HONG KONG, Jun 29, 2014 - (ACN Newswire) - Sinomax Group Limited ("Sinomax" and together with its subsidiaries, the "Group"), a leading marketer, manufacturer and distributor of quality visco-elastic pillows, mattress toppers and mattresses in the US, Hong Kong and the PRC, today announced the details of its proposed listing on the Main Board of The Stock Exchange of Hong Kong Limited ("HKSE").

Investment Highlights
-- Leading position in the mainstream market in the US and in the retail markets in Hong Kong and the PRC
-- Extensive and international sales and distribution network with diverse consumer base
-- Broad range of brands strategically targeted at different customers
-- Comprehensive product portfolio supported by strong research and development capabilities
-- Vertically integrated business model that guarantees quality products
-- Dedicated and experienced management team with proven track record of delivering sustainable growth and profitability

Offering Details

A total of 750 million Shares (comprising 150 million New Shares and 600 million Sale Shares, subject to the Over-allotment Option) will be offered under the Global Offering, of which 90% are for the International Offering and 10% are for the Hong Kong Public Offering. The indicative Offer Price range is between HK$1.06 and HK$1.43 per Share. Net proceeds from the Global Offering are estimated to be approximately HK$171.2 million assuming the Over-allotment Option is not exercised and based on an Offer Price of HK$1.25 per Share, being the mid-point of the proposed Offer Price range of HK$1.06 to HK$1.43 per Share.

The Hong Kong Public Offering will begin on 30 June 2014 (Monday) and end at noon on 4 July 2014 (Friday). The final Offer Price and allotment results will be announced on 9 July 2014 (Wednesday). Trading of Sinomax's shares will commence on the Main Board of the HKSE on 10 July 2014 (Thursday) under the stock code 1418. The Shares will be traded in board lots of 2,000 Shares each.

China Merchants Securities (HK) Co., Limited is the Sole Sponsor, Sole Global Coordinator and Sole Bookrunner, while China Merchants Securities (HK) Co., Limited and Taiping Securities (HK) Co., Limited are the Joint Lead Managers of the Global Offering.

Corporate Highlights

Leading position in the mainstream market in the US and in the retail markets in Hong Kong and the PRC
Sinomax is a leading marketer, manufacturer and distributor of visco-elastic products with prominent international market positions. Being the second largest supplier of mainstream visco-elastic health and wellness products with a market share of 30.2% in the US, the Group was also ranked first in both Hong Kong and the PRC retail markets of visco-elastic health and wellness products with a market share of 41.9% and 4.4% respectively, each in terms of 2013 retail sales value, according to Frost & Sullivan. Leveraging on its leading market positions, Sinomax is well-positioned to benefit from the market growth in the coming years, in particular, in the Chinese market with highly attractive growth amidst the increasing demand for quality products and rising awareness of a healthy lifestyle.

Extensive and international sales and distribution network with diverse consumer base
Sinomax sells its products primarily under its flagship brand "SINOMAX" through a far-reaching network in Hong Kong, the PRC and Macau. As at 31 March 2014, its "SINOMAX" products were sold nationwide, at 39 POS located in Hong Kong, 427 POS located in over 20 provinces or municipalities or autonomous regions in the PRC and 4 POS located in Macau. Internationally, Sinomax also sells a majority of its products to leading retailers in the US which resell its products to consumers through their own retail networks spanning across the US. As at 31 March 2014, the Group's products were available at over 6,000 POS in the US. The extensive distribution network enables it to reach a diverse consumer base, promote the awareness and trial of its brand to targeted customers.

Broad range of brands strategically targeted at different customers
Sinomax owns a portfolio of established brands and comprehensive products that are strategically targeted at a wide range of consumer groups and markets, enabling the Group to satisfy consumers with different preferences and needs. The Group's flagship brand "SINOMAX" has been recognised as providing quality visco-elastic products focused on middle to high end segment of the markets in Hong Kong and the PRC since its launch in 2001. In respect of the international markets, the Group's "ComforZen" and "Dream Serenity" brands target the mainstream visco-elastic health and wellness product market in the US whereas its licensed brands, such as "Sharper Image", "Awaken by Joan Lunden" and "HoMedics", focused on a higher product end.

Comprehensive product portfolio supported by strong research and development capabilities
With great emphasis on product research and development (R&D), Sinomax has been dedicated to improving existing or developing new visco-elastic material or other polyurethane foams in order to produce new products for its customers' well-being. Over the years, the Group has expanded the applications of visco-elastic material to a wide variety of products including bath products, automobile accessories and massage chairs. Thanks to its comprehensive product portfolio, the Group is well-equipped to target different consumer segments, expand its consumer base and provide a "one-stop" shopping experience to consumers reinforcing customer loyalty.

Vertically integrated business model that guarantees quality products
Sinomax controls the most critical elements of the value chain from raw material procurement, design, production and marketing to sales through its extensive retail network. The Group's vertical integration, in particular with its quality control and R&D capabilities, allows it to coordinate rapid responses to changes in market demand, efficiently collaborate on new innovations whilst maintaining uniform standards of product quality. The endorsement of the Group's "SINOMAX" branded mattresses and mattress toppers by the Chiropractic Doctors' Association of Hong Kong, and the recognition of the Group's mattresses by the Hong Kong Consumer Council as top quality are the testimonies of its high quality.

Future Strategies

To drive future growth, Sinomax will strengthen its flagship brand recognition through various marketing activities to further enhance overall image, reinforce the association between its products and the notions of health, relaxation and comfort. The Group also targets to expand its distribution network and diversify its sales channels, in particular, in its key markets, through opening over 10 "Sinomax Life Stores" in the PRC and Hong Kong in 2014, expanding its e-commerce sales channels and exploring an expansion of its traditional and other sales channels in the US.

Apart from brand building and network expansion, Sinomax will expand and diversify its product portfolio through further enhancements of its R&D capabilities and develop into other complementary product segments to capture market opportunities and to meet evolving preferences and demands of consumers. Furthermore, the Group plans to encourage repeat customer purchases and increase customer spending through adjusting its product variety, product mix and strengthening its customer loyalty programme.

To further improve its operational efficiency, the Group will further enhance its vertically integrated business model through upgrading and acquisition of machineries and expansion of production and warehousing facilities at Dongguan and Jiashan. Last but not least, the Group is aiming to pursue appropriate strategic acquisitions and business opportunities that are compatible with its business or which will further strengthen its value chain.

Mr Frankie Lam, Chairman of the Board, Executive Director and one of the founders of Sinomax, said, "We are pleased to announce Sinomax's listing plan on the Main Board of the Hong Kong Stock Exchange. This marks another remarkable milestone for the Group, which not only strengthens our capital base but also further enhances our brand reputation in the market. With our distinctive competitive edges, we are ready to strengthen our leading position in the visco-elastic health and wellness products market and capture more growth opportunities in the future."

Use of Proceeds

Based on the Offer Price of HK$1.25 per Share (being the mid-point of the proposed Offer Price range of HK$1.06 to HK$1.43 per Share) and assuming the Over-allotment Option is not exercised, net proceeds from the Global Offering are estimated to be HK$171.2 million and will be used as follows:

-- Brand building and promotion - 27%
-- Strategic acquisitions and business opportunities - 28%
-- Expand distribution network and diversify sales channels - 12%
-- Upgrading and acquiring production equipment and building new production warehouse facilities - 14%
-- Acquiring or set up of production facilities in the US - 6%
-- Design, research and development - 3%
-- General working capital - 10%

Financial Performance

---------------------------------------------------------------------------
(HK$000)               For the Year                      CAGR (2011-2013)      
                       Ended 31 December                      (%)         
---------------------------------------------------------------------------
                 2011          2012             2013                   
---------------------------------------------------------------------------
Revenue        1,778,443     1,971,495      2,369,539	      15.4%
---------------------------------------------------------------------------
Gross Profit   395,742	     464,759	    620,627	      25.2%     
---------------------------------------------------------------------------
Net Profit     94,623	     115,676	    145,033*	      23.8%   
---------------------------------------------------------------------------
Gross Margin   22.3%	     23.6%	    26.2%	      n/a     
---------------------------------------------------------------------------

*have already deducted the listing expenses of HK$20.8 million from the total net profit of HK$165.8 million recorded in the financial year ended 31 December 2013.

Contact:

Strategic Financial Relations Limited
Heidi So        +852 2864 4826   heidi.so@sprg.com.hk 
Joanne Lam      +852 2864 4816   joanne.lam@sprg.com.hk
Katrina Leung   +852 2864 4857   katrina.leung@sprg.com.hk
Fax:  +852 2527 1196 / 2804 2789

Source: Sinomax Group Limited
Sectors: Daily Finance, Daily News