speed apparel holding limited

376 Pages·2017·3.24 MB·English

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SPEED APPAREL HOLDING LIMITED SPEED APPAREL HOLDING LIMITED
尚 捷 集 團 控 股 有 限 公 司 尚 捷 集 團 控 股 有 限 公 司
(incorporated in the Cayman Islands with limited liability)
Stock code: 8183
Placing
Sponsor
Bookrunner and Lead Manager
IMPORTANT
If you arein anydoubt about any of the contents of thisprospectus,youshouldobtainindependent professional advice.
SPEED APPAREL HOLDING LIMITED
尚 捷 集 團 控 股 有 限 公 司
(incorporated in the Cayman Islands with limited liability)
LISTING ON THE GROWTH ENTERPRISE MARKET OF
THE STOCK EXCHANGE OF HONG KONG LIMITED BY WAY OF PLACING
Number of Placing Shares : 125,000,000 Placing Shares
Placing Price : HK$0.52 per Placing Share (payable in
full on application plus brokerage of 1%,
SFC transaction levy of 0.0027% and
Stock Exchange trading fee of 0.005%)
Nominal value : HK$0.01 each
Stock code : 8183
Sponsor
Bookrunner and Lead Manager
Hong Kong Exchanges and Clearing Limited, The Stock Exchange of Hong Kong Limited and Hong Kong Securities Clearing
Company Limited take no responsibility for the contents of this prospectus, make no representation as to its accuracy or
completeness and expresslydisclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or
anypart of thecontentsof thisprospectus.
A copy of this prospectus, having attached thereto the documents specified in the section headed ‘‘Documents delivered to the
Registrar of Companies and available for inspection’’ in Appendix V to this prospectus, has been registered with the Registrar of
Companies in Hong Kong as required by section 342C of the Companies (Winding Up and Miscellaneous Provisions) Ordinance
(Chapter32oftheLawsofHongKong).TheSecuritiesandFuturesCommissionofHongKongandtheRegistrarofCompaniesin
HongKongtake no responsibility as to the contents of this prospectusorany of the other documentsreferredto above.
Prospective investors of the PlacingShares should note that the obligations of the Underwriters under the Underwriting Agreement
are subject to termination by the Lead Manager (for itself and on behalf of the Co-Managers and the Underwriters) upon the
occurrence of any of the events set forth under the paragraph headed ‘‘Grounds for termination’’ in the section headed
‘‘Underwriting’’ in this prospectus at any time prior to 8:00 a.m. (Hong Kong time) on the Listing Date. Further details of these
termination provisions are set out inthe sectionheaded ‘‘Underwriting’’ in this prospectus.
Prior to making an investment decision, prospective investors should carefully consider all the information set out in this
prospectus, including the riskfactorsset out inthesection headed ‘‘Risk factors’’ in this prospectus.
27 January 2017
CHARACTERISTICS OF GEM
GEM has been positioned as a market designed to accommodate companies to which a
higher investment risk may be attached than other companies listed on the Stock Exchange.
Prospective investors should be aware of the potential risks of investing in such companies
and should make the decision to invest only after due and careful consideration. The
greater risk profile and other characteristics of GEM mean that it is a market more suited
to professional and other sophisticated investors.
Given the emerging nature of companies listed on GEM, there is a risk that securities
traded on GEM may be more susceptible to high market volatility than securities traded on
the Main Board and no assurance is given that there will be a liquid market in the
securities traded on GEM.
The principal means of information dissemination on GEM is publication on the
Internet website operated by the Stock Exchange. Listed companies are not generally
required to issue paid announcements in gazette newspaper. Accordingly, prospective
investors should note that they need to have access to the website of the Stock Exchange at
www.hkexnews.hk in order to obtain up-to-date information on GEM-listed issuers.
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EXPECTED TIMETABLE
If there is any change in the following expected timetable, the Group will issue an
announcement to be published on the website of the Stock Exchange at www.hkexnews.hk and the
Company at www.speedapparel.com.hk.
2017 (Note 1)
Announcement of the levels of indication of
interest in the Placing to be published on the
Company’s website (www.speedapparel.com.hk) and the website
of the Stock Exchange (www.hkexnews.hk) on or about (Note 2).......... Tuesday, 7 February
Allotment of Placing Shares to placees
(or their designated person(s)) on or about............................... Tuesday, 7 February
Despatch of share certificates
for the Placing Shares and/or deposit
into CCASS on or about (Notes 3 and 4)................................ Tuesday, 7 February
Dealings in the Shares on GEM to commence............... 9:00 a.m. on Wednesday, 8 February
Notes:
1. All times and dates refer to Hong Kong local time and date. If there is any change to the above expected timetable,
the Company will make a separate announcement to inform investors accordingly. Details of the structure of the
Placing, including its conditions and grounds for termination, are set out in the section headed ‘‘Structure and
conditions of the Placing’’ in this prospectus.
2. None of the Company’s website or any of the information contained in the Company’s website forms part of this
prospectus.
3. The share certificates for the Placing Shares are expected to be issued in the name of HKSCC Nominees Limited or
in the name of the placee(s) or their agent(s) as designated by the Underwriters and/or the placing agents. Share
certificates for the Placing Shares to be distributed via CCASS are expected to be deposited into CCASS on or about
Tuesday, 7 February 2017 for credit to the respective CCASS Participant’s stock accounts designated by the
Underwriters, the placees or their agents, as the case may be. No temporary documents or evidence of title will be
issued.
4. Share certificates for the Placing Shares will only become valid certificates of title at 8:00 a.m. (Hong Kong time)
on the Listing Date (such date is currently expected to be on Wednesday, 8 February 2017) provided that (i) the
Placing becomes unconditional in all respects and (ii) the right of termination as described in the section headed
‘‘Underwriting — Grounds for termination’’ in this prospectus has not been exercised and has lapsed.
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EXPECTED TIMETABLE
Pursuant to the force majeure provisions contained in the Underwriting Agreement in respect
of the Placing, the Lead Manager (also in its capacity as the Underwriter) has the right in certain
circumstances, subject to its absolute opinion, to terminate the obligations of the Underwriters
under the Underwriting Agreement at any time prior to 8:00 a.m. (Hong Kong time) on the Listing
Date (which is currently expected to be on Wednesday, 8 February 2017). Further details of the
terms of the force majeure provisions are set out in the section headed ‘‘Underwriting’’ in this
prospectus.
For details of the structure of the Placing, including its conditions and grounds for termination
thereof, please refer to the section headed ‘‘Structure and conditions of the Placing’’ in this
prospectus.
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CONTENTS
You should rely only on the information contained in this prospectus to make your
investment decision. The Company, the Sponsor, the Lead Manager, the Co-Managers and the
Underwriters have not authorised any persons to provide you with information that is different
from what is contained in this prospectus. Any information or representation not made nor
contained in this prospectus must not be relied on by you as having been authorised by the
Company, the Sponsor, the Lead Manager, the Co-Managers, the Underwriters, any of their
respective directors or affiliates of any of them, or any other persons or parties involved in the
Placing. The contents on the Company’s website at www.speedapparel.com.hk do not form part
of this prospectus.
Page
CHARACTERISTICS OF GEM ..................................................... i
EXPECTED TIMETABLE .......................................................... ii
CONTENTS ........................................................................ iv
SUMMARY ......................................................................... 1
DEFINITIONS ...................................................................... 15
GLOSSARY OF TECHNICAL TERMS .............................................. 23
FORWARD-LOOKING STATEMENTS .............................................. 24
RISK FACTORS .................................................................... 26
INFORMATION ABOUT THIS PROSPECTUS AND THE PLACING ................. 41
DIRECTORS AND PARTIES INVOLVED IN THE PLACING ........................ 45
CORPORATE INFORMATION ..................................................... 50
INDUSTRY OVERVIEW ............................................................ 53
REGULATORY OVERVIEW ........................................................ 67
HISTORY, REORGANISATION AND CORPORATE STRUCTURE .................. 84
BUSINESS .......................................................................... 94
CONNECTED TRANSACTIONS .................................................... 157
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CONTENTS
Page
DIRECTORS AND SENIOR MANAGEMENT ........................................ 160
RELATIONSHIP WITH THE CONTROLLING SHAREHOLDERS ................... 168
SUBSTANTIAL AND SIGNIFICANT SHAREHOLDERS ............................. 174
SHARE CAPITAL .................................................................. 176
FINANCIAL INFORMATION ....................................................... 179
STATEMENT OF BUSINESS OBJECTIVES AND USE OF PROCEEDS .............. 233
UNDERWRITING .................................................................. 243
STRUCTURE AND CONDITIONS OF THE PLACING ............................... 253
APPENDIX I — ACCOUNTANTS’ REPORT ................................. I-1
APPENDIX II — UNAUDITED PRO FORMA FINANCIAL INFORMATION ... II-1
APPENDIX III — SUMMARY OF THE CONSTITUTION OF THE COMPANY
AND CAYMAN ISLANDS COMPANY LAW ............... III-1
APPENDIX IV — STATUTORY AND GENERAL INFORMATION ............. IV-1
APPENDIX V — DOCUMENTS DELIVERED TO THE REGISTRAR OF
COMPANIES AND AVAILABLE FOR INSPECTION ....... V-1
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SUMMARY
This summary aims to give you an overview of the information contained in this prospectus.
As this is a summary, it does not contain all the information that may be important to you. You
should read this prospectus in its entirety before you decide to invest in the Placing Shares.
There are risks associated with any investment. Some of the particular risks in investing in
the Placing Shares are set out in the section headed ‘‘Risk factors’’ in this prospectus. You
should read that section carefully before you decide to invest in the Placing Shares.
BUSINESS OVERVIEW
The Group is an apparel supply chain management services provider. Headquartered in Hong
Kong, the Group principally sells knitwear products predominately in the Japan market. The Group
provides one-stop apparel supply chain management solutions for its customers ranging from
fashion trend analysis, product design and development, sourcing and procurement of materials,
production management, quality control and logistics services. The Group’s customers are mainly
owners or sourcing agents of apparel retail brands based in Japan, which products are marketed and
sold under their own brands. Mr. Chan, an executive Director, the chairman of the Board and the
chief executive officer of the Company, has over 25 years of experience in apparel market and was
dispatched to Japan from March 1993 to February 1994 before joining the Group. Mr. Chan
together with some of the Group’s senior management and merchandising team members are
proficient in or have knowledge of Japanese, which enables the Group to communicate well with
the customers and retail brand owners from Japan.
During the Track Record Period, the Group’s revenue was mainly derived from the sales of
knitwear products such as pullovers, cardigans, vests and skirts with the provision of apparel supply
chain management services to its customers. Majority of the Group’s products were sold to
customers in Japan, amounted to approximately HK$367.3 million, HK$390.8 million and HK$94.7
million for each of the Track Record Period, which accounted for approximately 92.3%, 89.8% and
96.2% of the Group’s total revenue, respectively. The Group does not possess its own labels. All
the Group’s knitwear products are manufactured in accordance with the specifications and
requirements set out by the Group’s customers in the sales orders, some designs of which are
recommended or inspired by the Group.
Through collaboration with its customers, the Group leverages its extensive knitwear fashion
exposure and experience to accommodate their needs (including design preferences, knitwear styles
and application of materials) in view of market trends. At the start of two main fashion seasons (i.e.
spring/summer and autumn/winter) and from time to time, the Group will in-advance provide and
recommend new product designs and inspirations to its customers based on the upcoming fashion
trends through presentations and face-to-face meetings. During the Track Record Period, the design
and promotion department formulated or developed over 100 new knitwear designs in each main
fashion season. According to the feedback from the customers, the Group then modifies the product
design and specifications in respect of the colour tone, selection of raw materials and styling.
Alternatively, the customers may provide their own designs to the Group. As part of the apparel
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SUMMARY
supply chain management services, the Group suggests types of yarn to be used in the knitwear
designs provided by the Group or the customers’ own designs. The Group also provides the
products samples, which are produced by the third-party manufacturers, for the customers’
consideration. The purchase orders are placed in bulk once all the production details including but
not limited to the production schedule, production specifications and other specific requirements are
confirmed by the customers.
During the Track Record Period, all of the knitwear products were produced by the third-party
manufacturers engaged by the Group. The Group has established relationships with a number of
third-party manufacturers and implemented quality control procedures throughout the production
process. The Group’s merchandising department closely follows up with and provides technical
advice to the third-party manufacturers at various stages of the production process. To ensure that
the quality of the knitwear products conforms to the customers’ specification, final quality
inspection is performed by the third-party inspection centre before packaging for delivery. The
Group also manages the logistic arrangements of finished knitwear products from third-party
manufacturers to customers.
The Group’s knitwear products can be divided into two categories, namely womenswear and
menswear. During the Track Record Period, the Group’s revenue was mainly derived from the sales
of womenswear, representing approximately 90.6%, 83.5% and 78.1% of the Group’s total revenue
respectively. The following tables set out (i) a breakdown of the Group’s revenue; (ii) the total sales
quantities; and (iii) the average selling prices per unit of finished product sold by the Group to its
customers during the Track Record Period by categories:
Revenue
For the year ended 31 March For the four months ended 31 July
2015 2016 2015 2016
HK$’000 % HK$’000 % HK$’000 % HK$’000 %
(unaudited)
Womenswear 360,390 90.6 363,294 83.5 56,127 83.9 76,824 78.1
Menswear 37,578 9.4 71,912 16.5 10,792 16.1 21,601 21.9
397,968 100.0 435,206 100.0 66,919 100.0 98,425 100.0
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SUMMARY
Sales volume
For the year ended 31 March For the four months ended 31 July
2015 2016 2015 2016
Units sold Units sold Units sold Units sold
(’000) % (’000) % (’000) % (’000) %
(unaudited)
Womenswear 7,179 95.4 7,010 83.9 1,072 81.9 1,458 79.2
Menswear 343 4.6 1,342 16.1 237 18.1 382 20.8
7,522 100.0 8,352 100.0 1,309 100.0 1,840 100.0
Average selling price
For the year ended 31 March For the four months ended 31 July
2015 2016 2015 2016
Average Average Average Average
selling selling selling selling
Price price Price price Price price Price price
range (Note) range (Note) range (Note) range (Note)
HK$ HK$ HK$ HK$ HK$ HK$ HK$ HK$
(unaudited) (unaudited)
Womenswear 30.8–326.0 50.2 21.8–378.3 51.8 21.8–265.2 52.3 38.1–198.9 52.7
Menswear 41.3–655.2 109.7 36.3–499.2 53.6 36.3–243.4 45.6 46.5–175.9 56.5
Total average
selling price 52.9 52.1 51.1 53.5
Note: The average selling price represents the revenue for the year/period divided by the total sales quantities for
that year/period.
During the Track Record Period, the Group’s revenue amounted to approximately HK$398.0
million, HK$435.2 million and HK$98.4 million, respectively. The sales volume of the Group’s
products increased by approximately 11.0% for the year ended 31 March 2016 and approximately
40.6% for the four months ended 31 July 2016, which was in line with the increase in the Group’s
revenue for the respective corresponding period while the average selling price of the Group’s
products remained relatively stable during the Track Record Period.
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