MECOM Power and Construction Limited Announces Details of Proposed Listing on the Main Board of the Stock Exchange of Hong Kong Limited

From left: Mr. Lao Ka Wa (Vice president), Mr. Lam Kuok Wa (Chief Operating Officer), Mr. Kuok Lam Sek (Chairman and Executive Director), Mr. Sou Kun Tou (Chief Executive, Officer, Deputy Chairman and Executive Director) and Ms. Tam Wing Yee (Finance Manager and Company Secretary)
Global Offering of 300,000,000 Shares;
Indicative Offer Price Range between HK$ 1.00 and HK$1.25 per Offer Share

HONG KONG, Jan 31, 2018 - (ACN Newswire) - MECOM Power and Construction Limited ("MECOM" or the "Group"), a renowned integrated construction engineering contractor and power substations constructor in Macau who specialising in highly challenging and complex structural steelworks and high voltage power substation construction projects, today announced the details of its proposed listing on the Main Board of the Stock Exchange of Hong Kong Limited ("SEHK").

Offering Details

The Group intends to offer a total of 300,000,000 Shares under the Global Offering (comprising 240,000,000 new Shares and 60,000,000 Sale Shares) (subject to the Over-allotment Option), of which 90%, or 270,000,000 Shares, are for International Placing (subject to reallocation and the Over-allotment Option) and the remaining 10%, or 30,000,000 Shares, are for Hong Kong Public Offering (subject to reallocation). The indicative Offer Price range per Offer share is between HK$1.00 and HK$1.25. After deducting the underwriting commissions and estimated total expenses paid and payable for the Global Offering, the net proceeds receivable by the Group will be approximately HK$203,700,000 to HK$261,600,000.

The Hong Kong Public Offering will commence at 9:00 a.m. on 1 February 2018 (Thursday), and end at 12:00 noon on 6 February 2018 (Tuesday). The final Offer Price and the allocation results are expected to be announced on 12 February 2018 (Monday). Dealing of the Shares is expected to commence on the Main Board of SEHK on 13 February 2018 (Tuesday) under the stock code 1183. The shares will be traded in board lots each of 2,000 shares.

Innovax Capital Limited is the Sole Sponsor of the listing. Innovax Securities Limited and Sinolink Securities (Hong Kong) Company Limited are the Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers.

Investment Highlights

Strengthen leading market position in the construction industry in Macau
MECOM undertakes highly difficult and complex structural steelworks and high voltage power substation construction projects. Over the years, it has actively participated in the construction of world-class hotels and resorts in Macau, including a large scale integrated resort in Cotai featuring the world's largest water-based extravaganza, the world's first free-form exoskeleton skyscraper luxury hotel designed by a legendary architect, the ballroom and theatre roof structural steelworks of a Paris-themed casino resort in Cotai and public sector projects such as the power distribution system of the Hong Kong-Zhuhai-Macau Link Bridge. The Group expects the backlog revenue from 49 projects on hand as at 31 December 2017 to amount to approximately MOP625,600,000, and the contract value expected to be recognised for the years ending 31 December 2018, 2019 and 2020 are approximately MOP495,100,000, MOP105,900,000 and MOP24,600,000 respectively. Building on its good reputation and proven track record, the Group believes that it is well poised to bid and undertake more large-scale construction projects in Macau in the coming years.

Enhance financial position to seize business opportunities in Macau riding on its development potential
Aligning with the development blueprint in the "13th Five-year Plan" published by the Chinese Government in 2016, the Macau Government announced in the same year a five-year development plan to drive development of the city's tourism industry and turn the city into a world-class tourism centre. In its plan, the Macau Government expects to step up promoting construction of large-scale infrastructure, hotels and resorts. In 2016, the Macau Government revealed its urban development strategy which includes reclamation for land. The reclamation plus subsequent new construction activities are expected to drive development of the construction service industry in Macau. Moreover, after the Hong Kong-Zhuhai-Macau Link Bridge is completed and open for use, Macau will be linked to, in the Pearl River Delta in the east, Hong Kong and Zhuhai in Guangdong province, hence it can help expedite development of the Macau-Hong Kong-Guangdong Greater Bay Area, and in return, implementation of the Greater Bay Area strategy is expected to directly benefit the city's construction service industry. The Group believes the listing can give it access to the capital market, enable it to improve cashflow and working capital positions, and increase its fund-raising capability to support undertaking of more sizeable projects.

An award-winning construction contractor with diversified and high level experience and capabilities
In the past decade, the Group had participated in a wide range of high-profile, large-scale and technically challenging structural steelworks and civil engineering construction projects, as well as high voltage power substation construction projects, in Macau. Among those undertakings, three landmark projects won gold awards (Hong Kong-Macau Region) for structural steelworks from the China Construction Metal Structure Association. The winning projects are a large scale integrated resort in Cotai that features the world's largest water-based extravaganza, the world's first free-form exoskeleton skyscraper luxury hotel designed by a legendary architect, and the ballroom and theatre roof structural steelworks of a Paris-themed casino resort in Cotai.

As for construction of high voltage power substations and systems installation, the Group designed and built the 220/110kV Lotus Substation in Cotai, which is the largest high voltage power substation in Macau, for a sole concession public utility company which provides electricity in the city. In addition, with its facilities management, alteration and maintenance works and services complementary with its two main business streams, the Group can offer comprehensive one-stop solutions to customers. It is thus able to secure from clients longer term contracts that are unaffected by industry cycles, and in turn, provide itself with a steady alternative income stream.

Established strong and long-term business relationship with key customers and business partners
MECOM has a strong market reputation thanks to its insistence on setting high quality and technical standards, and its diversified experiences and capabilities. The Group has built strong long-term business relationships of between three to 10 years with key customers, including owners and operators of famous world-class hotels and resorts in Macau and leading US-based casino operators. With solid experience and capabilities, the Group not only has a competitive advantage in landing future contracts and assuring itself of a steady flow of repeat business and revenue, but also serves as testament to the marketing and business development efforts it has embarked on with new customers.

Sizeable and stable pool of engineering technicians and experienced management team
As installation of structural steelworks requires personnel with specialised skills, and building power substation demands mastering of sophisticated technologies, MECOM directly recruits skilled and trustworthy technicians. That has allowed it to effectively control the quality and performance of workers and related labour cost, to boost project efficiency and increase profit margin, in order to ensure work and service quality as well as efficient and reliable time and site management. The Group has 497 employees and an import quota for 488 foreign workers, giving it a steady labour supply reducing its reliance on service of sub-contractors' workers. To enhance the abilities of its professional teams, the Group plans to recruit additional skilled labour for different positions, a move that can bolster its sizeable and stable engineering technician team.

In addition, MECOM has an experienced management team, which boasts professional experience and knowledge of Macau's construction industry, and hence is able to take the Group's business forward in steady strides. The team is led by Mr. Kuok Lam Sek, Founder, Chairman and Executive Director, Mr. Sou Kun Tou, CEO and Executive Director, and Mr. Lam Kuok Wa and Mr. Lao Ka Wa, senior management team members, of the Group. They have around 35, 29, 20 and 24 years of experience in the construction industry respectively. Other management team members also have strong industry background and they have between 21 and 37 years of industry experience, conducive to driving long term development of the Group.

Business Strategies

The Group aims to strengthen its leadership as an integrated construction engineering contractor and power substation constructor in Macau and to enlarge its market share in the city. The Group stands out in its ability to bid for and undertake more large scale construction projects in Macau in the coming few years. At the same time, it plans to expand its financial capacity for issuing performance bonds that it may capture new business opportunities. The Group expects to be able to bid for more power-related projects and construction projects in Macau.

In addition, the Group plans to expand construction capacity by enhancing its machinery and equipment. That will enable the Group to better control costs and estimate bidding prices, as well as enhance its ability to meet the needs and requirements of different customers. To accommodate the new machineries and equipment, the Group needs additional storage space. Thus, it plans to acquire a warehouse and enhance storage facilities for its equipment and materials. It also plans to recruit additional staff to help improve and expand its different business segments.

Use of Net Proceeds

Assuming Over-allotment Option is not exercised, net proceeds from the Global Offering (after deducting underwriting fees paid and payable and estimated expenses in connection with the Global Offering) receivable by the Group are estimated at approximately HK$203,700,000 to HK$261,600,000 (with indicative Offer Price range per Offer share between HK$1.00 and HK$1.25). The Group intends to apply such net proceeds in the following manner:

Item / Percentage
Finance issuance of performance bonds when undertaking new projects: 43.0%
Acquire a warehouse to strengthen storage facilities for equipment and materials: 23.3%
Recruit additional staff for improving and expanding (a) facilities management, alteration and maintenance works and services and (b) structural steel works, civil engineering, construction, and fitting out and renovation works: 17.3%
Acquire additional machineries: 6.4%
General corporate purposes and working capital: 10.0%
Total: 100%

About MECOM Power and Construction Limited
MECOM Power and Construction Limited is a renowned integrated construction engineering contractor and power substations constructor in Macau specialising inhighly challenging and complex structural steelworks and high voltage power substation construction projects. The Group ranked fifth among Macau-based construction contractors in the civil engineering market and ranked second in high voltage power substation construction projects market in Macau. Over the last decade, MECOM has participated in a wide range of large-scale and high profile technically challenging structural steelworks and civil engineering construction projects as well as high voltage power substation construction projects in Macau. Among these works, three landmark projects were honoured with the gold award (Hong Kong-Macau Region) by China Construction Metal Strcuture Association. In addition, the Group's facilities management, alteration and maintenance works and services complement the two key business segments, enabling MECOM to provide seamless one-stop solutions to customers and enter into long term contracts with customers that are unaffected by industry cycles, which in turn provide a stable alternative income source.

Media Enquiries:
Strategic Financial Relations Limited
Vicky Lee Tel.: (852) 2864 4834 Email: vicky.lee@sprg.com.hk
Keris Leung Tel.: (852) 2864 4863 Email: keris.leung@sprg.com.hk
Janet Fong Tel.: (852) 2864 4817 Email: janet.fong@sprg.com.hk



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