Company introduction

Youku Resources is a newly established supplier of iron ore products in Pahang, Malaysia. Its main business includes exploration, mining, crushing and refining of iron ore and the sale of iron ore products in the form of iron ore concentrates and iron ore powders. The company mainly sells its iron ore products to Chinese steel manufacturers and/or their respective purchasing agents.

In terms of performance, the company's earnings continued to grow, from $6.9 million from the date of registration (August 23, 2010) to December 31, 2010 to $27.2 million in 2011, and further increased to $54.3 million in 2012. Furthermore, the company's gross profit in 2012 was 22.1 million US dollars, showing a significant increase from 7.7 million US dollars in 2011 and 0.7 million US dollars from the date of establishment (August 23, 2010) to December 31, 2010. Its gross margin also increased from 9.7% from the date of registration (August 23, 2010) to December 31, 2010, to 28.1% in 2011 and 40.6% in 2012.

Assumed use of proceeds

Assuming that the over-allotment rights were not exercised, the net proceeds from the sale of shares were estimated to be approximately HK$495 million based on the median sale price of HK$1.45 per share.