Mengjinyuan (02585.HK), the original gold and jewelry brand manufacturer from Tianjin, will be offering shares from today (November 21) until next Tuesday (November 26). It is expected to be listed on the Hong Kong Stock Exchange on November 29, 2024, exclusively sponsored by CITIC Securities.

Dream Gold Garden plans to sell 43.9568 million H shares globally (accounting for 16.10% of the total shares after the issuance is completed), of which 90% are international offers, 10% are public offers, and 15% are over-allotted shares. The sale price per share ranges from HK$12.00 to HK$14.40, 200 shares per lot, and a maximum capital of about HK$0.633 billion.

Assuming an offering price of HK$13.20 per share (median of the offering price range), with all overallotment rights being exercised, and not counting the 1.5% discretionary fee, Mengjin Yuan expects total listing expenses to be approximately HK$82.86 million, including 3.8% underwriting commission, SEHK transaction levy, SEHK transaction fee, financial exchange bureau transaction levy, legal and other professional fees, printing and other expenses, etc.

Mengjinyuan's IPO introduced 5 cornerstone investors, who subscribed for a total of about 0.197 billion yuan (about HK$0.212 billion) of shares to be sold, including Tianjin Haitai Capital subscribed for 73 million yuan, Matrix Capital subscribed for 40 million yuan, Solid Elegance subscribed for 26.98 million yuan, Bright Ambition subscribed for 39.98 million yuan, and Swift Grace subscribes for RMB 16.98 million.

Mengjinyuan's current IPO raised about HK$0.5024 billion (based on the median sale price): about 50.0% will be used to upgrade production facilities in Weifang, Shandong to enhance the Group's production capacity to further achieve business growth; about 34.0% will be used to expand and strengthen the Group's sales network, including setting up 33 new self-operated stores and improving the scale and operation of the Group's seven self-operated direct sales area service centers; about 16.0% will be used to invest in information technology, including improving the Group's operating efficiency through the acquisition of an integrated digital system of operating data.

In Mengjinyuan's IPO, CITIC Securities/CITIC Lyon are its sole sponsors, overall coordinators, and exclusive global coordinators. Other underwriters include Agricultural Bank International, Everbright Securities International, Futu Securities, ICBC International, and TradeGo Markets; Deloitte as its auditors; Jiayuan and Jiayuan (Hong Kong) are its Chinese lawyers and corporate Hong Kong lawyers; Jingtian Gongcheng and Annilida are their respective lawyers in China; and Frost Sullivan as their industry advisors.

According to the prospectus, in Mengjinyuan's shareholder structure after listing, Mr. Wang Zhongshan, Mrs. Zhang Xiuqin, and their son, Mr. Zhang Guoxin, and their daughter, Ms. Wang Na, directly or indirectly held about 75.00% of the shares as a group of controlling shareholders (of which Mr. Wang Zhongshan directly held 23.72% of the shares, Ms. Zhang Xiuqin directly held 21.98% of the shares, and Jin Meng Partnership (Wang Zhongshan 18.72%, Zhang Guoxin 18.18%, Wang Na 18.18%, some executives and employees holding the remaining shares) held 8.06% of the shares; Jin Yuan partnership (Zhang Xiuqin 81.33%, Some executives and employees hold the remaining shares) hold 3.30% of the shares; Jinlong Partnership (Zhang Xiuqin 59.89%, directors and supervisors or company employees hold the remaining shares) holds 3.30%; Tianjin Yuanjinmeng (Zhang Guoxin 50%, Wang Na 50%) holds 14.65%). Tianjin Haitai Group holds 3.66% of the shares through Tianjin Haikaixin; CITIC Securities (06030.HK, 600030.SH) holds 1.53% of the shares through CITIC Securities; Mr. Zhao Duxue, chairman of Shandong Mining Machinery (002526.SZ), holds 1.47% of the shares; the famous Chinese actor, Ms. Huang Yi (Haiqing), holds 1.28% of the shares; Ms. Zhang Zhenyi, a former director and chief financial officer of Shandong Mining Machinery, holds 0.84% of the shares; Mr. Zhang Jianjun, a former director of Shandong Mining Machinery, holds 0.12% of the shares; and other public shareholders hold 16.10% of the shares.

Dream Golden Garden, formerly known as Changle Huaye Jewelry, was founded by Mr. Wang Zhongshan and Ms. Zhang Xiuqin in 2000. According to Frost & Sullivan, as of the last practical date, Dream Gold Gold is China's leading original gold and jewelry brand manufacturer (OBM) and one of the few companies that have achieved operations covering all key stages of the industry. According to Frost & Sullivan, based on gold processing volume and gold jewelry revenue, Mengjinyuan ranked third and fifth among Chinese gold and jewellery brands respectively; in terms of gold jewellery (excluding gold bars) revenue, Mengjinyuan ranked fifth among gold and jewellery brands in the Chinese gold and jewellery market, with a market share of 3.8%. In terms of gold and jewelry revenue in third-tier cities, Mengjinyuan ranks third among Chinese gold and jewelry brands. As of June 30, 2024, Mengjinyuan's sales network covered 2,850 franchisees operated by 1,670 franchisees, 36 self-operated stores, 7 direct service centers and 17 provincial agents, as well as the consumer network of online stores on mainstream e-commerce platforms.

Link to Dream Golden Garden prospectus:

https://www1.hkexnews.hk/listedco/listconews/sehk/2024/1121/2024112100018_c.pdf