IPO | Ligao Health Life is now offering shares and is expected to go public on March 31

Futu News, March 22, this Tuesday$REDCO HEALTHY (02370.HK)$ It was announced that it will issue 50 million shares from March 22 to 25. The company plans to issue 50 million shares, of which 5 million shares will be publicly sold and 45 million shares will be sold internationally. The issue price range per share is HK$4.1-5.1, with 500 shares per lot. It is expected to be listed on March 31.

According to reports, Ligao Health Life was split from$REDCO GROUP (01622.HK)$The company is a leading property management service provider in Jiangxi Province. The service network covers strategically significant core regions such as the Yangtze River Delta region, the Greater Bay Area, the Bohai Rim region and central China.

As of September 30, 2021, the company has a total of 91 projects under management, with a total construction area of 15.1 million square meters, and the company has contracted to manage 133 projects located in 28 cities in 11 provinces, cities and autonomous regions of China, with a total contract construction area of 23.5 million square meters.

In terms of financial data, the company achieved steady growth during the track record period. From 2018 to 2020, the company recorded revenue of RMB 124 million, RMB 181 million and RMB 222 million respectively, with a compound annual growth rate of 33.5%; during the same period, it achieved net profit of RMB 11.122 million, RMB 29.804 million and RMB 44.1 million, with a compound annual growth rate of 99.1%. In the first nine months of 2021, the company recorded revenue of RMB 260 million and net profit of RMB 275.35 million.

On the industry side, in recent years, with rapid urbanization and continuous growth in per capita disposable income, the construction area and number of properties under management by the top 100 property service companies have increased rapidly. The average total construction area under management of the top 100 property service companies increased from about 23.6 million square meters in 2015 to about 48.8 million square meters in 2020, with a compound annual growth rate of about 15.63%.

Due to the increase in the floor area and number of properties under management, the average revenue of the top 100 property service companies increased from approximately RMB 540.8 million in 2015 to approximately RMB 1,173 million in 2020, with a compound annual growth rate of about 16.7%.

In terms of fund-raising purposes, based on the median issue price, the company's net income was approximately HK$180 million (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 55% will be used to seek selective strategic investment and acquisition opportunities to further expand the scale and geographical coverage of the business and expand the service portfolio; about 15% will be used to upgrade IT infrastructure and enhance smart community management; about 10% will be used to enhance lifestyle management services to enhance customer experience and satisfaction; about 10% will be used to expand community health services as health managers; and about 10% will be used for general business purposes and working capital as the company continues to expand its business scope and scale.

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