IPO | Huanlong Holdings will be offering shares now and is expected to be listed on January 11

Futu News, December 29, this Wednesday$VANOV HOLDINGS (02260.HK)$ The announcement was announced that the shares will be offered from December 29 to January 3. The company plans to issue 114.2 million shares, including a public sale of 11.42 million shares and an international sale of approximately 103 million shares, with an issue price of HK$1.22-1.44 per share, and 2,000 shares per lot. It is expected to be listed on January 11, 2022.

According to reports, Huanlong Holdings is mainly engaged in the design, manufacture and sale of paper blankets. According to the Frost & Sullivan report, in 2020, the company ranked fourth among China's leading paper and blanket manufacturers in terms of revenue, with a market share of about 5.8%.

The company provides customers with comprehensive paper blanket services, from conducting site inspections, advising customers on the types and specifications of paper blankets, to purchasing suitable raw materials for production, quality control, delivering paper blankets to customers and providing after-sales services.

In terms of financial data, from 2018 to 2020, the company achieved revenue of RMB 159 million, 167 million yuan and 183 million yuan respectively, with a compound annual growth rate of 7.1%; during the same period, it recorded net profit of RMB 37.206 million, RMB 35.77 million and RMB 410.13 billion, with a compound annual growth rate of 5.0%.

In the first half of 2021, the company recorded total revenue of 76.515 million yuan, up 15.6% year on year; net profit for the same period was 14.286,000 yuan, up 24.1% year on year.

On the industry side, sales of paper blankets have grown rapidly since 2016, driven by expected growth in domestic paper production and strong demand for paper blankets in Southeast Asia. As product quality improves, the compound annual growth rate of 6.3% will be maintained from 2021 to 2025.

The overall sales value of paper blankets made in China increased from about RMB 2,189.9 million in 2016 to about RMB 3,1661 million in 2020, with a compound annual growth rate of about 9.7%. As local paper blanket manufacturers continue to expand the production of high-speed paper blankets, the sales value of paper blankets is expected to grow at a compound annual growth rate of about 7.6% from 2021 to 2025.

As for Cornerstone Investors, two Cornerstone investors (Mr Gong Zhaohui and Mr Chan Hung) agreed to subscribe for the number of shares to be subscribed at the offering price, totaling HK$40 million.

In terms of use of financing, the net proceeds of the company were approximately HK$102 million (based on the median issue price, assuming that the over-allotment rights were not exercised). According to the prospectus, the company intends to use the net proceeds from the sale of shares for the following purposes:

About 40% will be used to purchase machines to upgrade the Shanghai production base and Chengdu production base in the second phase of the capacity expansion plan; about 20% will be used to strengthen the company's R&D capacity; about 10% will be used to seek strategic acquisitions; about 20% will be used to repay certain outstanding bank loans to reduce the company's debt; and about 10% will be used for working capital and other general corporate purposes.

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