HONG KONG--(BUSINESS WIRE)--Highlights
- Mainly perform site formation works in Hong Kong as a subcontractor. The Group has over 14 years of experience in undertaking site formation works in Hong Kong.
- It provides comprehensive site formation solutions to client, which generally includes general earthworks, tunnel excavation works, foundation works and road and drainage works; it also undertakes steel fabrication and installation of steel working platform.
- Direct customers are mostly main contractors of various types of infrastructural and commercial and residential building in Hong Kong.
- For the three years ended 31 March 2016, the Group generated revenue of approximately HK$83.9 million, HK$139.4 million and HK$210.0 million, of which revenue generate from public sector projects accounted for approximately 95.0%, 99.3% and 73.8%
- Its net profit was approximately HK$9.7 million, HK$25.7 million and HK$28.4 million for the respective years.
- According to the Euromonitor Report, in 2015, the Group held an approximately 7.2% market share among site formation and clearance works subcontractors in Hong Kong.
Financial Highlights
| For the year ended 31 March | ||||||
| HK$’000 | 2014 | 2015 | 2016 | |||
| Revenue | 83,947 | 139,367 | 210,046 | |||
| Gross Profit | 14,933 | 35,236 | 42,500 | |||
| Profit before tax | 11,446 | 30,743 | 34,599 | |||
| Total comprehensive income for the year | 9,653 | 25,671 | 28,424 | |||
| Gross Profit Margin (%) | 17.8% | 25.3% | 20.2% | |||
| Net Profit Margin (%) | 11.5% | 18.4% | 13.5% | |||
CHerish Holdings Limited (“CHerish”, together with its subsidiaries, the “Group”; stock code: 2113), site formation subcontractor in Hong Kong, announces the details of its plan to list on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”) today.
A total of 185,000,000 shares will be offered under the Share Offer, of which 166,500,000 Shares, or 90% will be offered by way of Placing. The remaining 10%, or 18,500,000 Shares, will be offered under the Public Offer. The offer price per offer share is HK$ 0.70. The Public Offer will commence on 30 September 2016 (Friday) and close at 12:00 noon on 5 October 2016 (Wednesday). The allotment result is expected to be announced on 14 October 2016 (Friday). Dealings of Shares on the Main Board of the SEHK is expected to commence on 17 October 2016 (Monday).
Per Offer Price of HK$0.70 per Offer Share, the aggregated net proceeds from the Share Offer will be approximately HK$79.3 million. CHerish intends to apply the net proceeds as follows: 1) approximately 59.5% for acquisition of additional machinery and equipment for site formation projects; 2) approximately 18.7% for expansion of workforce both at office level and worksite level; 3) approximately 12.6% will be earmarked to take out a surety bond in respect of a new contract relating to a site formation project at Hong Kong International Airport and other contracts that plan to tender for the year ending 31 March 2017; and 4) the remaining balance of approximately 9.2% for general working capital.
Dakin Capital Limited is the Sponsor and China Prospect Securities Limited is the Bookrunner of the Share Offer. China Prospect Securities Limited and Dakin Securities Limited are the Joint Lead Managers.
Business Overview
CHerish mainly perform site formation works in Hong Kong as a subcontractor. The Group has over 14 years of experience in undertaking site formation works in Hong Kong. It provides comprehensive site formation solutions to client, which generally include general earthworks, tunnel excavation works, foundation works and road and drainage works. As part of ancillary services, it also undertakes steel fabrication and installation of steel working platform.
According to the Euromonitor Report, in 2015, the Group held an approximately 7.2% market share among site formation and clearance works subcontractors in Hong Kong. In terms of revenue receipts generated from provision of site formation work in Hong Kong, it is estimated that the top five players in the industry accounted for around 26.4% of the contractor’s site formation market share in 2015.
For the three years ended 31 March 2016, the Group generated revenue of approximately HK$83.9 million, HK$139.4 million and HK$210.0 million. Its net profit was approximately HK$9.7 million, HK$25.7 million and HK$28.4 million for the respective years.
Direct customers are mostly main contractors of various types of infrastructural and commercial and residential building in Hong Kong. Such projects can generally be categorised into public sector projects and private sector projects. During the Track Record Period, revenue generate from public sector projects accounted for approximately 95.0%, 99.3% and 73.8% of total revenue, which amount to HK$79.8 million, HK$138.5 million and HK$155.0 million for the respective years.
Competitive Strengths
Followings are the competitive strengths of the Group:
1) Well established presence in the site formation industry in Hong Kong
The Group has over 14 years of experience in undertaking site formation works as a subcontractor in Hong Kong. Over the years, the Group believe that it have established itself as a dedicated subcontractor in the site formation sector consistently achieving customer satisfaction, quality of work and cost control which in turn enables the Group to gain confidence from customers and therefore increase opportunities of winning new projects from customers.
During the Track Record Period, the Group has completed two site formation projects involving blasting works, a site formation works for a railway line extension project and a tunnel excavation works project for a link road relating to Hong Kong-Zhuhai-Macao Bridge. Currently, as part of the Hong Kong-Zhuhai-Macao Bridge project, the Group is undertaking a tunnel excavation project by drill and break method. Completion of this project is expected to take place in December 2016. Furthermore, the Group has also received a number of awards from customers in recognition of work quality and safety management.
2) Experienced management team and qualified personnel
The Group’s management team has extensive industry knowledge and project experience in site formation projects. Mr. TANG Man On, Executive Director and Chairman, who has over 40 years of experience in construction industry in Hong Kong, is responsible for overseeing the Group’s business development strategy and site operations. Mr. KWOK Hoi Chiu, Executive Director and Chief Executive Officer, who has over nine years of experience in contract management for construction projects, is responsible for general management and overseeing the engineering and technical aspects of projects.
As at the Latest Practicable Date, the Group has an in-house team of one blasting engineer, and three registered shotfirers.
3) Possession of a range of machinery and equipment
The Group possess its own machinery and equipment for performing different types of site formation works and therefore the Group is not materially reliant on suppliers for machinery and equipment rental. The Group has made substantial investment in purchasing own machinery and equipment for performing different types of site formation works. As at 31 March 2016, total net book value of machinery and equipment that the Group owns amounted to approximately HK$16.9 million, which includes, among others, hydraulic excavators, hydraulic hammers, drill rigs, jumbo drill rigs, shotcrete machines, loaders and air compressors.
4) Stable relationship with major customers and suppliers
The Group has established stable business relationship with major customers who are mostly main contractors. Among five largest customers during the Track Record Period, it has been providing services to them for a period ranging from one to five years. Besides, the Group has established stable business relationship with major suppliers and the longest time with which is approximately five years. The Group’s stable business relationships with major customers and suppliers would further enhance its market recognition and enable the Group to attract more potential business opportunities.
5) Commitment to maintaining safety standard, quality control and environmental protection
The Group place considerable emphasis to maintain safety standard and quality control as they can directly affect reputation, service quality and profitability. During the Track Record Period and up to the Latest Practicable Date, the Group was not subject to any ongoing employees’ compensation claim and personal injury claim and this demonstrates the effectiveness of its occupational health and safety management system.
Future Strategies
Looking forward, the Group intends to pursue the following strategies:
1) Expanding market share and competing for more site formation projects
The aggregate number and size of projects that The Group is able to undertake in contracting business hinges on, among others, the amount of available working capital. In further developing business and having regard to available financial resources, the Group’s Directors intend to undertake more projects in the future, including those with surety bonds requirements.
2) Acquisition of additional machinery and equipment
To further enhance and optimise overall efficiency, capacity and technical capability in performing site formation projects of different scale and complexity, the Group intend to acquire additional machinery and equipment with higher efficiency and technical capability. It will also allow the Group to cope with business development plan to undertake larger site formation projects in the future and minimise machinery and equipment rental costs. To cope with the Group’s needs for the projects on hand and newly awarded projects, it plans to acquire drill rigs, hydraulic excavators, air compressors, crawler cranes, hydraulic hammers and shotcrete machines required for site formation projects.
3) Further strengthening manpower
The Group considers it is imperative to expand workforce in terms of both the staff strength and staff skills. To enhance manpower for projects on hand and newly awarded projects, the Group intends to increase the number of staff by 37 which consists of two quantity surveyor staff, two procurement staff, one engineering manager, three foremen, 15 plant operators and 14 general site workers. In addition, it also intends to provide more training to existing and newly recruited staff on occupational health and safety, machinery and equipment operation and site formation works techniques.
About CHerish International Holdings Limited
CHerish mainly perform site formation works in Hong Kong as a subcontractor. The Group has over 14 years of experience in undertaking site formation works in Hong Kong. It provides comprehensive site formation solutions to client, which generally includes general earthworks, tunnel excavation works, foundation works and road and drainage works. As part of ancillary services, it also undertakes steel fabrication and installation of steel working platform.
According to the Euromonitor Report, in 2015, the Group held an approximately 7.2% market share among site formation and clearance works subcontractors in Hong Kong.