HONG KONG — 1957 & Co. (Hospitality) Limited (“1957 & Co.” or the “Group”), a restaurant operation and management group and operator of the Hong Kong restaurants An Nam, Mango Tree, Sushi Ta-ke, Gonpachi and Paper Moon, announced today the details of its proposed listing of its shares on the Growth Enterprise Market (“GEM”) of The Stock Exchange of Hong Kong Limited (the “SEHK”) under the stock code 8495.
– The Group operates a total of 11 restaurants at prime locations in Hong Kong, under its four self-owned brands and three franchised or sub-licensed brands, in which two restaurants commenced operation in July and September 2017. The restaurants are designed by award-winning interior and lighting designers
– For the five months ended 31 May 2017, the Group?s revenue increased by approximately 13% to HK$98,950,000 when compared with the corresponding period in 2016
– The quality of its restaurants is widely recognised and several restaurants have been awarded “Hong Kong Tatler Best Restaurants – Hong Kong & Macau Edition” and/or ‘MICHELIN Guide Recommended Restaurants’
– The Group also offers restaurant management and consultancy services in Hong Kong and the PRC, tapping into fast growing food and beverage opportunities in the PRC
The Group intends to offer an aggregate of 80,000,000 Shares (subject to the Offer Size Adjustment Option), of which 72,000,000 are Placing Shares (subject to re-allocation and the Offer Size Adjustment Option) and the remaining 8,000,000 Shares are for the Public Offer (subject to re-allocation). After deducting underwriting fees and other estimated expenses, assuming an Offer Price of HK$0.75 (being the mid-point of the proposed Offer Price range of HK$0.625 to HK$0.875) and the Offer Size Adjustment Option is not exercised, the net proceeds which the Group will receive from the Share Offer is estimated at approximately HK$36.2 million.
The Public Offer commences on 23 November 2017 (Today) and ends at 12:00 noon on 28 November 2017 (Tuesday). The final offer price and the allotment results are expected to be announced on or before 4 December 2017 (Monday). Trading of shares is expected to commence on the SEHK on 5 December 2017 (Tuesday) under the stock code 8495 and in board lots of 4,000 Shares each.
Halcyon Capital Limited is the Sole Sponsor, while Halcyon Securities Limited and Opus Capital Limited are the Joint Bookrunners.
Strong capability in restaurant development and project management
As at the Latest Practicable Date, 1957 & Co. operated 11 restaurants carrying its four self-owned brands Sushi Ta-ke, An Nam, Modern Shanghai, Hokkaidon and three franchised or sub-licensed brands including Mango Tree, Gonapchi and Paper Moon. The Group’s management team, with diverse expertise in food and beverage operations and interior and lighting design, is able to help new restaurants develop efficiently and generate economic returns.
During the Track Record Period, the Group opened five new restaurants with an average turnaround time (the period between the handover date of the leased premises and the opening date of the restaurant) of two to three months, evidencing the Group’s strong restaurant development capability. The Group also provides restaurant management and consultancy services in Hong Kong and the PRC, and has signed three pre-opening consultancy agreements with clients to launch five restaurants in the PRC and also two restaurant management consultancy agreements.
Experienced chefs and use only premium quality ingredients
The head chefs of the Group’s different restaurants boast extensive experience in their culinary specialty. The executive chefs of Mango Tree (Elements), An Nam, and Sushi Ta-ke are all from overseas, excellent at cooking their native cuisines, and thus are able to give customers an authentic and quality dining experience.
To ensure high food quality, the Group’s head chefs and operation team work together in selecting ingredient suppliers. Only those which can supply stable and high quality ingredients at competitive prices would be chosen. The management and head chefs of the Group would from time to time visit the origins of the food ingredients to gain first-hand understanding of the different farming, fishing and cultivation processes involved. Through careful selection and laying down quality specifications for food ingredients, the Group hopes to offer the best quality dishes to its customers. Moreover, the menus of the Group’s restaurants are continually refined to include seasonal dishes to attract customers. The Group also refers to weekly food costs variation reports of its restaurants to help keep its food costs in check.
The quality of the Group’s restaurants is widely recognised and several restaurants have been awarded “Hong Kong Tatler Best Restaurants – Hong Kong & Macau Edition” and/or “MICHELIN Guide Recommended Restaurants”.
Restaurants are strategically located
The Group’s restaurants are located in commercial and tourist-friendly areas (Causeway Bay, Tsim Sha Tsui and Kowloon Tong), as well as residential areas (Taikoo Shing and Yuen Long), with high pedestrian flow. Locations include Lee Gardens, Elements, Harbour City, Festival Walk, Cityplaza and YOHO mall. To minimise internal competition and boost potential profitability, the Group places restaurants of the same brand in different areas.
With its restaurants (especially its An Nam and Mango Tree restaurants) gaining popularity, the Group is in a better position to secure better locations for restaurant operations, and that in turn can enhance the business performance of its restaurants.
Professional management team with diverse expertise
The Group’s experienced management team possesses expertise in all aspects of restaurant business. Mr. Steve Leung, non-executive Director and Chairman of the Group, is a renowned hotel interior designer in Asia with many international awards to his name. Mr. Tino Kwan, the Group’s executive Director and Vice Chairman, is an award-winning lighting designer with profound experience in restaurant and hotel projects and his innovative lighting designs were honoured with various high profile awards in the Asia Pacific region. Bringing to the Group’s wealth of knowledge in food and beverage operations is Mr. Kwok Chi Po, the Group’s executive Director and Chief Executive Officer, who previously held executive management positions, opened and operated various restaurants in South East Asia and the Middle East. Hence, the Group is capable of providing customers with quality dining experiences in unique environments, filled with artistic flairs, giving itself a competitive edge.
Future Development Plan
According to a Euromonitor report, the full service restaurant industry in Hong Kong is expected to see a moderate recovery between 2017 and 2021 at a CAGR of 3.72%. The sales value of full-service restaurants in Mainland China is expected to maintain a strong but decelerated 6.0% growth in the same period. The Group believes as the food and beverage industry in the PRC continues to grow rapidly, the demand for restaurant consultancy services will follow. Thus, the Group intends to set up an office in Shenzhen to help build its brand presence and to serve as a contact point for customers in the PRC. It expects the office to enhance the quality and efficiency of its restaurant consultancy service in the PRC.
The Group also plans to expand its restaurant network by opening, investing in and managing more restaurants and enriching its brand portfolio. It plans to open or invest in and manage seven new restaurants (three in Hong Kong and four in the PRC) in the year ending 31 December 2018 and open or invest in and manage another four new restaurants (two in Hong Kong and two in the PRC) in the year ending 31 December 2019.
As at the Latest Practicable Date, the Group has secured leases in relation to two new restaurants to be opened in Hong Kong in early 2018. For the Mango Tree restaurant and the Modern Shanghai restaurant it intends to invest in and manage in Shenzhen and Guangzhou, the Group has already identified suitable business partners to form joint venture companies that will hold the relevant restaurants.
In addition, the Group will strive to enhance its brand recognition, source high quality ingredients and present new dishes to customers. The Group will continue to look for suppliers of high-quality and authentic food ingredients in countries such as Japan, Thailand and Vietnam. In addition, the Group intends to cooperate with chefs who are skilled in the cuisines offered by their restaurants to develop new dishes.
Use of Proceeds
Assuming the Offer Price is fixed at HK$0.75 per share (being the mid-point of the Offer Price range), the Group intends to use the net proceeds of approximately HK$36.2 million on the following:
Items / Percentage
– Set up and open in Hong Kong one restaurant under a refined Ta-ke brand: 31.5%
– Set up and open in Hong Kong two restaurants under the Modern Shanghai brand: 28.5%
– Set up and open one Mango Tree restaurant in Hong Kong: 17.9%
– Set up and open one Hokkaidon restaurant in Hong Kong: 9.9%
– Settle part of the setting up cost and opening cost of a Paper Moon Restaurant: 8.3%
– Develop restaurant pre-opening consultancy and management consultancy services in the PRC: 3.9%
HK$’000 For the year ended 31 December For the five months ended 31 May
2015 2016 2017
Revenue 161,750 217,793 98,950
Gross profit 115,712 158,948 72,288
Gross profit margin (%) 71.5 73.0 73.1
Adjusted profit (excl. listing expenses) 31 5,246 1,466