Offering of 200,000,000 Shares;
Offer Price Ranges from HK$0.27 to HK$0.35 per Share
HONG KONG — Prime Intelligence Solutions Group Limited (“Prime Intelligence” or the “Group”), a provider of biometrics identification solutions in Hong Kong, Macau and the PRC, 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
The Group proposes to issue a total of 200,000,000 Shares (the “Offer Shares”), of which 90% or 180,000,000 Shares (subject to reallocation and the Offer Size Adjustment Option) are for Placing and the remaining 10% or 20,000,000 Shares (subject to reallocation) will be offered to public in Hong Kong under Public Offer (collectively the “Share Offer”). The indicative Offer Price range is between HK$0.27 and HK$0.35 per Share. Net proceeds to be received by the Group from the Share Offer are estimated to be approximately HK$40.2 million, assuming an Offer Price of HK$0.31, being the mid-point of the indicative Offer Price range.
The Public Offer will commence from 9:00am on 30 January 2018 (Tuesday), and end at 12:00nn on 2 February 2018 (Friday). The final Offer Price and results of allocation are expected to be announced on 13 February 2018 (Tuesday). Dealing of Shares on the GEM is expected to commence on 14 February 2018 (Wednesday) under the stock code 8379. The Shares are to be traded in board lots of 10,000 Shares.
Ample Capital Limited is the Sole Sponsor of the Listing, Ample Orient Capital Limited and Pacific Foundation Securities Limited are the Joint Bookrunners and Joint Lead Managers. AFG Securities Limited and HF Securities and Futures Limited are the Co-Lead Managers.
Investment Highlights
Various functions of biometrics identification devices to meet the needs of different customers
The Group’s team comprises staff with extensive experience and knowledge in software development and product knowledge. The professional software development department is able to provide solutions to customers, such as tailor-made software programming, technical assistance and software system integration with the customer’s existing system. The Group’s biometrics identification devices possess different functions, such as face identification, fingerprint identification, finger vein identification, hand geometry identification and iris identification, that have enabled the Group to successfully capture customers from different industries.
Leading position in Hong Kong and Macau markets particularly in the construction industry segment
The revenue the Group generated from Hong Kong and Macau market in 2016 amounted to approximately HK$52.2 million. According to the Ipsos Report, the Group’s revenue from Hong Kong and Macau markets accounted for approximately 11.0% of the biometrics identification device distribution industry in Hong Kong and Macau. The Group’s leading position in Hong Kong and Macau markets and in the construction industry segment enables it to capture more sizable customers who require high quality and tailored-made functions. Given its leading position in the market, the Group considers that it has established a reputation in the market, that such reputation has helped the Group to expand its business with existing customers and to market its products to potential customers. The Group can leverage its established relationship with the customers in the construction industry to increase its chance of receiving tender invitations from them for future projects.
Extensive customer base with a variety of industries
The Group has an extensive customer base of around 780 customers during the Track Record Period with a variety of industries such as casino, construction, hotel and catering, financial service, manufacturing, property management and office leasing. The diversified applicability of products will enable the Group to capture more customers from different industries after Listing.
Established long business relationship with major customers
Comprehensive solutions, dedication to understanding the needs of its customers and the ability to respond to their requests have fostered the customers’ ongoing trust and confidence in its products and services. As the Group is able to offer biometrics identification devices with a wide range of functions, customers can source suitable biometrics identification devices that suit their different needs for different projects or sites. Customers’ confidence in its services and products is demonstrated by the Group’s continuous ability to secure business from a number of repeated customers over the years.
Business Strategies
The Group’s business objectives are to further its growth in existing business by strengthening marketing capabilities and expanding product portfolio through enhancing software development, in order to further enlarge its market share in Hong Kong and Macau and to become one of the active biometrics identification solutions providers in the PRC.
As such, the Group intends to expand its business in the Southern China region. The Group plans to make use of its competitive advantages, experience and network with overseas suppliers to expand its business in the PRC market by launching affordable locally manufactured fingerprint identification devices in the PRC. Besides, the Group plans to enhance the quality of after-sales services and strengthen the operation support by setting up three customer services centers in Changning district of Shanghai, Furong district of Changsha and Huli district of Xiamen respectively, and to hire technicians and purchase motor vehicles. The advantages of the well-developed transportation infrastructures in these regions will help the Group widen its sales network in Southern China.
Furthermore, the Group plans to improve the information technology system. Through investing in an ERP system with RFID technology, recruiting suitable personnel to operate, purchasing computer equipment and server and integrating the ERP system into operation, the Group will benefit from the higher efficiency, flexibility, accuracy and timeliness in budgeting, inventory control, order processing and financial reporting. The Group will also develop a customer relation management (CRM) system in order to provide more instant and effective communication with customers and enhance internal efficiency by instantly report to or record in ERP system after delivery, installation or maintenance services by using the CRM system.
Additionally, the Group intends to set up a new and separate software development center in Zhuhai, the PRC to further enhance and develop the Group’s software. Besides, in order to meet the future challenges, the Group plans to increase the manpower for the three software development teams. The new centre will be operated by three software development teams with different functions and will be separately responsible for satisfying customers requests from Hong Kong, Macau and the PRC for tailor-made modification of “Time Expert” and other software development, developing more functions and modules of “Time Expert”, and researching and expanding the application of its biometrics devices/solutions for different industries in order to enrich and diversify the Group’s solution portfolio.
Use of Net Proceeds from the Share Offer
The Group proposes to use the net proceeds from the Share Offer in the following:
Items / Percentage (%)
Launch of affordable locally manufactured fingerprint identification devices as part of the expansion plan of the business in Southern China: 35.6
Enhancing the quality of after-sales services and strengthening of the operation support as part of the expansion plan of the business in Southern China: 11.4
Improving the information technology system: 11.2
Setting up a new and separate software development center in the PRC to further enhance and develop the Group’s software: 34.1
Working capital: 7.7
Total: 100%
Financial Highlights
For the year ended 31 March For the four months ended 31 July
(HK$’000) 2016 2017 Change 2016(unaudited) 2017 Change
Revenue 59,065 63,522 +7.5% 20,102 24,398 +21.4%
Gross profit 35,688 38,017 +6.5% 11,098 15,228 +37.2%
Gross profit margin 60.4% 59.8% – 0.6ppt 55.2% 62.4% +7.2ppt
Total comprehensive income for the
year/period attributable to the
owners of the Company 12,835 13,124 +2.3% 3,148 4,788 +52.1%
Net profit margin 22.1% 21.3% -0.8ppt 16.5% 18.9% +2.4ppt
Net profit margin is calculated as the profit for the year/period divided by revenue.