HONG KONG – Microware Group Limited (Microware), which ranked first* among the IT infrastructure solutions providers in terms of revenue in Hong Kong offering IT infrastructure solutions services and IT managed services, has announced the details of the proposed listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”).
Offering Details
The Group intends to issue a total of 60,000,000 Shares, of which 90% or 54,000,000 Shares are for International Placing (subject to adjustment and the Offer Size Adjustment Option); and the remaining 10% or 6,000,000 Shares (subject to adjustment) are for Hong Kong Public Offering (collectively the “Global Offering”).
The indicative offer price range is between HK$1.20 and HK$1.46 per Share. Net proceeds to be received by the Group from the Global Offering are estimated to be approximately HK$51.8 million.
The Hong Kong Public Offering has commenced, and will end at 12:00 noon on 1 March 2017 (Wednesday). The final Offer Price and the results of the allocation are expected to be announced on 7 March 2017 (Tuesday).
Dealing in the Shares on the Main Board of SEHK is expected to commence at 9:00 a.m. on 8 March 2017 (Wednesday) under the stock code 1985. The Shares are to be traded in board lots of 2,000 Shares.
Innovax Capital Limited, the Sole Sponsor, and together with Sinolink Securities (Hong Kong) Company Limited, are the Joint Global Coordinators, the Joint Bookrunners and two of the Joint Lead Managers of the Listing.
Investment Highlights
Wide and stable customer base in terms of number and type of recurring clients
For each of the three years ended 31 March 2016, the Group served over 2,000 clients per year.
The Group had also been able to derive a significant portion of revenue through its customer base as its revenue from recurring clients amounted to approximately 95.9%, 96.4%, 97.2% and 96.6% of its revenue for each of the three years ended 31 March 2016 and the five months ended 31 August 2016, respectively.
Proven track record in providing customised one-stop services to clients
The Group’s one-stop business model has allowed it to provide customised IT infrastructure solutions and IT managed services to its clients, who are able to enjoy the convenience of an “one-stop” IT experience which begins with (i) consultation and advice, (ii) hardware and/or software procurement, (iii) implementation, to (iv) management and maintenance of the IT infrastructure solutions.
Well-established relationships with well-known hardware and/or software manufacturers
The Group is one of the highest-ranking authorised resellers of 11 hardware and/or software manufacturers in Hong Kong. The Group is of the view that it had been able to achieve the highest ranking mainly due to its ability to meet certain benchmarks set by the manufacturers, which include its sales volume each year, its technical capabilities and knowledge, and its service quality.
Leading market position in terms of revenue in Hong Kong and long term presence in the IT infrastructure solutions industry
Microware Ltd., the Group’s major operating subsidiary, was incorporated in 1985 and the Group’s long operating history has enabled it to develop long-term business relationships with its clients and suppliers and to build brand awareness. According to the Ipsos Report, the Group ranked first among the IT infrastructure solutions providers in terms of revenue in Hong Kong in 2015.
Experienced management team, qualified employees and strong talent pool for public sector projects
The Group is led by, among others, Mr. Yang Peter Shun Tsing, Executive Director, and Mr. Chu Ming Ho, Executive Director, Chairman and Chief Executive Office of the Group, who have over 27 years and over 23 years of experience in the IT industry, respectively. The Group is of the view that the vision of its management team has been fundamental to its success. The Group’s senior management had been working with the Group for an average of approximately 12 years.
Growth Strategies
Having considered the benefits of undertaking large-scale contracts, such as the enhancement of public awareness and the likely credit worthiness of the clients of such contracts, it has been part of the Group’s business strategy to undertake more large-scale contracts.
The number of contracts undertaken which have a contract sum of HK$10 million or above increased from three during the year ended 31 March 2014 to 12 during the year ended 31 March 2016.
Through the Listing, the Group would like to significantly enhance its corporate governance and transparency in order to continue its current business strategy of undertaking large-scale contracts, maintain and improve its quality of services to clients, improve efficiency and achieve cost control, and strengthen its market position.
Looking forward, the Group intends to continue investing in its employees by recruiting more suitable personnel with the necessary qualifications and experience and offering additional training to existing and new employees.
Dividends Policy
The Group intends to distribute to its shareholders no less than 40% of its profits available for distribution.
Assuming an Offer Price of HK$1.33 per Share (being the mid-point of the indicative Offer Price range), the estimated net proceeds of the Global Offering for the Group will be approximately HK$51.8 million, intended for the following uses:
Uses / Amount (HK$’million) / Percentage (%)
Upgrading IT management systems: 18.1 / 35.0%
Enhancing capability to undertake large-scale contracts by financing performance securities: 12.9 / 25.0%
Recruitment and training of employees: 10.4 / 20.0%
Strengthening marketing efforts: 5.2 / 10.0%
Additional working capital and other general corporate purposes: 5.2 / 10.0%
Total: 51.8 / 100% – BusinessNewsAsia.com