Satu Holdings Limited Announces Details of its Proposed Listing on the GEM of SEHK

Share Offer of 250,000,000 Shares;
Offer Price Ranges from HK$0.20 to HK$0.24 per Share

HONG KONG, Sep 29, 2017 - (ACN Newswire) - Satu Holdings Limited ("Satu Holdings" or the "Group"), which principally engages in the design, development and production management of a wide variety of homeware products, today announced the details of the proposed listing of its shares (the "Listing") on the Growth Enterprise Market ("GEM") of The Stock Exchange of Hong Kong Limited ("SEHK").

Offering Details

Satu Holdings is offering 250,000,000 Shares at the Offer Price, of which 90% are for Placing Shares, the rest of approximately 10% are under Public Offer. The estimated net proceeds from the Public Offering, assuming an Offer Price of HK$0.22, being the mid-point of the indicative Offer Price range of HK$0.20 to HK$0.24, are expected to be approximately HK$32.0 million.

The Hong Kong Public Offering commenced at 9:00 a.m. today (29 September 2017), and will close at 12:00 noon on 6 October 2017 (Friday). The final Offer Price and the basis of allocation are expected to be announced on 13 October 2017 (Friday). Dealings in the Shares on the SEHK will commence at 9:00 a.m. on 16 October 2017 (Monday) under the stock code 8392. The Shares will be traded in board lots of 10,000 Shares.

Sunfund Capital Limited is the Sole Sponsor. Emperor Securities Limited is the Sole Bookrunner and Lead Manager and Sunfund Securities Limited is the Co-Lead Manager.

Investment Highlights

Well-established relationships with major customers

Since 2002, the Group has targeted overseas customers and from 2006 onwards, the Group has built a diverse global customer portfolio comprising international brand owners and licensee, chain supermarkets and renowned department stores such as Kahler Design A/S. During the Track Record Period, most of its homeware products were exported overseas with shipment destinations in more than 25 countries, including U.K., Denmark, Germany, Australia, France, Poland, Italy and U.S..

As at 31 March 2017, the Group has sustained business relationships with its five largest customers for a period ranging from approximately two to over 10 years. Such well-established relationships were built up by comprehensive services including: (i) product design and development, (ii) stringent quality control, (iii) stable delivery of high quality products, and (iv) timely completion of customers' orders.

Moreover, another major strength of the Group would be its efficient and effective communication with customers, which has assisted the Group in securing long established relationships. The Group's sales and marketing team is responsible for coordinating and maintaining an effective communication channel between overseas customers and the third party factories in the PRC. Such communication allows the Group to better understand the needs and requirements of its customers which enables stable orders from its customers.

Strong and established product design and development capabilities

The Group offers a diverse product portfolio, including home decorations, bathroom accessories and kitchenware and tableware. It launches new seasonal collections twice per annum for homeware products in order to catch up with the seasonal trends. During the Track Record Period, the Group has successfully launched over 60 series of homeware products, which in aggregate include over 1,500 pieces of homeware products with various colours, sizes, shapes and features.

The Group continuously seeks to identify new product trends and applications to cater to the latest market trends. Its product design and development team also works with third party factories, sales and marketing team and customers to fine-tune designs to suit the tastes of end customers and the feasibility of production.

Streamlined business model and stringent quality control measures throughout the production processes

The Group engages third party factories to undertake the production processes. By outsourcing the production processes, the Group can focus its resources on product design, development of production technologies, quality control as well as customer sales and services and supply products in stylish design and at good quality.

The Group places emphasis on product quality by implementing comprehensive quality control and production control. The production and quality control processes are carried out by its quality assurance team to oversee the quality control of products by regularly visiting the third party factories and conducting product inspections. The quality assurance team also meets regularly with customers and the third party factories to review the possibilities of further quality enhancement.

Growth Strategies

Moving forward, the Group will continue to enhance its presence and expand market share in the global homeware products industry. Leveraging its market presence, the Group plans to broaden its customer base and attract new international brand owners and licensees in order to diversify revenue sources and increase market share. Hence, the Group plans to improve its existing office and showroom in Shenzhen, the PRC and also establish one liaison office with showroom in Europe and one liaison office in U.S., with which to provide prompt response to customers' needs and explore potential customers.

Additionally, the Group plans to continue improving its design capabilities and skills by providing trainings and further enhance the design technology for development of products. In order to do so, the Group plans to upgrade the existing design software and purchase new design software as well as to acquire advance design hardware to facilitate new product development. The Group is launching its own e-commerce platform by the end of 2017, on which the existing and potential customers can obtain more information about the Group's brand and products, keep posted of new product series, and place purchase orders. Such self-operated e-commerce platform is expected to enhance brand recognition, corporate image and reputation.

The Group intends to set up a quality control laboratory at its largest third party factory to perform product testing, which administrative cost and time required for transporting and transferring the samples to the quality control laboratory can be greatly reduced. With the establishment of the quality control laboratory, not only it can perform quality control testings against the products developed by the Group directly during the process of product design and development, it can also enhance the quality of products, expand the Group's operation scale, as well as assisting the Group in meeting requirements of potential customers who require suppliers to have their own quality control laboratories for conducting product testing, thus increasing chance in sourcing new customers and broadening the Group's customer base.

Financial Highlights
HK$'000                 Year ended 31 Mar 2016           Year ended 31 Mar 2017
Revenue                        85,669                            65,224
Gross profit                   27,644                            25,732
Gross profit margin            32.3%                             39.5%
Profit for the year            9,306                             10,336
Net profit margin              10.9%                             15.8%

Use of Net Proceeds

Assuming an Offer Price per Offer Share of HK$0.22 (being the mid-point of the indicative Offer Price range), the estimated net proceeds are expected to be approximately HK$32.0 million, intended to be applied for the following purposes:

Uses / Percentage
- Broaden the existing customer base, increasing the Group's market share in the existing target markets and expanding into new markets: 42.2%
- Enhance brand recognition and awareness and promote corporate reputation: 20.0%
- Enhance design and development capabilities: 15.0%
- Enhance quality assurance capabilities: 15.0%
- Provide funding for working capital and other general corporate purposes: 7.8%
Total: 100%

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