November 12 news, Hong Kong stocks and new shares died before listing, more stringent listing conditions announced, Bette Group was suspended by the Hong Kong Stock Exchange before listing, what is the performance of the company's sponsors?

On November 11th, Bette Group Holdings (01491) announced that, in accordance with the prospectus, an announcement containing information on the final offering price, the enthusiasm of the international placement, the application level of the Hong Kong public offering and the basis for allocating the Hong Kong offering shares will be issued on Thursday, November 11, 2021.

As the company needs time to respond to enquiries from regulators, the board of directors hereby announces that due to the need for more time to implement the announcement and obtain regulatory approval, the publication of the announcement and the listing schedule of the company will be postponed. The board of directors will provide the market with the latest information as soon as practicable.

On November 12, the Bette Group announced that due to the delay in listing, the company had decided to postpone the global offering and listing on the main board and announced the following arrangements for the refund of the applied shares for the Hong Kong public offering.

A refund is mainly made by the applicant for a partial refund of the difference between the maximum offering price and HK $1.0 (that is, the issue price determined on the pricing date) and full refund (including 1% brokerage commission, 0.0027% SFC transaction levy and 0.005% Stock Exchange transaction fee) for all or part of the applicants who were not accepted (based on the result of the provisional distribution at that time).

Beit Group, a manufacturer of household goods from Deqing County, Huzhou, Zhejiang Province, has submitted its forms to the Hong Kong Stock Exchange three times on May 6, November 10, 2020 and May 10, 2021 respectively. The first two times failed, and this time it successfully broke through the customs, but it is subject to specific conditions.

According to the prospectus, Bette Group is mainly engaged in designing, developing, manufacturing and selling all kinds of common household necessities, such as laundry products, household cleaning utensils and kitchen utensils, and its business is export-oriented. and the company's products are mainly sold to the United States, Britain, Germany and Australia.

According to the prospectus, from 2018 to 2020, Beit's income was about 329 million yuan, 337 million yuan and 385 million yuan respectively, and the profit during the period was 40.996 million yuan, 34.057 million yuan and 46.252 million yuan respectively. It is worth noting that the company's adjusted net profit decreased from 17.13 million yuan in the first April of 2020 to 13.07 million yuan in the same period in 2021.

After listing, the company's shareholding is still highly concentrated, with the controlling shareholder holding 75%, that is, Mr. Zhu, Mr. Fang, Mr. Mao and Mr. Zhang jointly have the right to control 75% of the issued share capital of the Company through Beautiful Homeland.

According to the prospectus, the SEHK imposes two conditions on the company:

1) the Company and the exclusive sponsor shall provide the listing Committee with details of the Company's marketing plan, including our strategies for investor positioning, marketing, pricing and allocation. In the event of any subsequent deviation from these strategies, the Company and the exclusive sponsor shall explain and deal with any further enquiries in this regard.

2) the Company undertakes to report the use of the funds obtained to its compliance advisers on a monthly basis within 12 months after listing, and the Company and its compliance advisers shall promptly inform the Stock Exchange of the use of the proceeds mentioned in this prospectus and the deviation of ╱ or underwriting commission and listing expenses, and make an announcement in due course.

If the Company fails to meet the above conditions (I) and undertakes to comply with the conditions (ii), the Company will not be granted listing approval. Therefore, the Company may not be able to obtain listing approval for listing.

It is worth noting that the postponement of the listing of Bette Group may be related to the tightening of the listing of small new shares on the Hong Kong Stock Exchange and tighter supervision, as evidenced by the recent failure of more and more applications for new shares. At the same time, industry analysis is also related to more and more improper listing of new shares.

The Joint statement on misconduct involving initial Public offerings issued by the Securities and Futures Commission and the Hong Kong Stock Exchange on 20 May this year is aimed at misconduct involving initial public offerings. It is mentioned that the high praise of bulk cargo is characterized by the lack of robust and transparent share placement arrangements and price exploration process, unusually high underwriting commissions and suspicious arrangements.

In addition, Pang Ming, chief economist and chief strategist at Huaxing Securities (Hong Kong), said that this should be related to the company's high proportion of distribution commission, which needs to be further explained.

According to the Bette Group prospectus, the company's reimbursement commission accounts for 10% of the company's total issuing price. Bette Group has arranged a total of seven underwriters in this listing. Including Zhifu Capital, first Shanghai, Guotai Junan Hong Kong, Junsheng Securities, Chuanwen Securities, Fude Financial, Yuantong Global Securities, most of them are local small brokerages.

Assuming the offer price is HK $1.10 per offer share (i.e. the median indicative offering price range of HK $1.20 to HK $1.20), the total underwriting commission, financial advisory and documentation fees, listing fee, exchange fee, SFC transaction levy, legal and other professional fees together with printing and other expenses related to the global offering is approximately HK $40.7 million (assuming the over-allotment option has not been exercised).

Wen Tianna, a senior investment banker, said that the Hong Kong Securities and Exchange Commission has always been wary of raising funds for small and medium-sized enterprises, and the new measures may be a start, and the distribution of underwriting commissions may be further regulated in the future.

According to the prospectus, the company's exclusive sponsor raised money for one of the underwriters, Zhifu, which is also a joint global coordinator, book manager and co-leader.

According to Sina Hong Kong stock statistics wind data, a total of eight listed companies recommended by Zhifu Finance in Hong Kong have been listed, basically with a strong rise on the first day, but they have often fallen by more than 60% since listing, and Xinchang Chuangzhan Holdings has plummeted 83.4%. These companies are all small stocks with a market capitalization of less than HK $1 billion.