Group Overview
The Group is an electronic manufacturing service provider that mainly manufactures and sells customized industrial electronic parts and products. Its headquarters is in Hong Kong, and production facilities are located in Nansha District, Guangdong Province. As an original equipment manufacturer, the Group manufactures products according to design and technical specifications provided by customers. The Group's revenue mainly comes from three types of original equipment manufacturer products, divided into (1) mechanical and electrical products, (2) switch power supplies, and (3) smart chargers. These products are generally used in various industrial electronic equipment, such as renewable energy facilities, communication equipment, commercial transportation equipment, medical equipment and security systems. From 2014 to 2016, the Group sold more than 60% of its products to European customers.
Industry Overview
According to Ipsos, the total sales value of the European industrial electronics manufacturing services industry increased from HK$170.1 billion in 2010 to HK$184.4 billion in 2016, with a compound annual growth rate of 1.4%. The report expects the total sales value of the European industrial electronics manufacturing services industry to increase from HK$190.5 billion in 2017 to HK$208.4 billion in 2020, with a compound annual growth rate of 3.1%.
The faster pace of growth is mainly due to positive expectations from the industry and the declining cost advantage of moving manufacturing activities to the Asia Pacific region.
Risks
For the three years ended December 31, 2016 and the five months ended May 31, 2017, the amount of revenue contributed by the five major customers accounted for 73.8%, 70.1%, 81.0% and 81.5% of total revenue. Since the Group has no long-term trading agreements with customers and the Group is not their exclusive supplier, the Group cannot guarantee that its five largest customers will continue to purchase their products at the current level in the future. If the Group's main customers stop placing orders or lower order prices, it will adversely affect the Group's business performance.
valuations
According to the prospectus, assuming that the global offering was completed on May 31, 2017, the net worth range of consolidated tangible assets of HK$249 million to HK$296 million per share was HK$0.25 to HK$0.30, based on the anticipated issuance of 1 billion shares after completion of the stock offering.
Use of proceeds:
Assuming an offer price of HK$0.62 (the median of the offer price range), after deducting estimated expenses due from the sale of shares, the net proceeds are estimated at approximately HK$109.2 million.