29 June 2008 - Tianyi Fruit Holdings Limited, one of the leading frozen concentrated orange juice manufacturers in the People's Republic of China, today announced its plan to seek a listing on the Main Board of The Stock Exchange of Hong Kong Limited through an international placing and public offer of 250 million new shares at a price ranging between HK$0.63 and HK$0.73 per share.
Based on the mid-point of the indicative offer price range of HK$0.68 per share, the Group’s trailing price-to-earnings ratio would be 6.7 times. Tianyi Fruit plans to raise proceeds between HK$157.5 million and HK$182.5 million for expansion of its scale of operations.
The Share Offer consists of 225 million international placing shares and 25 million public offer shares, with an over-allotment option. Should the option be exercised in full, the Group may allot and issue up to 37.5 million additional shares to cover over-allocations in the international placing.
The Group is principally engaged in the production and distribution of FCOJ and its related product, namely orange pulp. It also engages in the wholesale of fresh oranges. In order to fully utilize the production capacity of its production plants for those periods other than the pressing season of oranges, the Group also involves in the production and distribution of concentrated strawberry juice and concentrated gooseberry juice.
China’s FCOJ industry is still relatively small and niche when compared to world’s major FCOJ producing countries such as Brazil and the United States. Currently, China is still relying on imported FCOJ to fulfill its supply shortfall. Driven by growing economy and improvement in standard of living and disposable income as well as increasingly health and nutrition awareness among the general population in China, the demand for healthy drink such as orange juice and FCOJ (which is used to produce the orange juice) is expected to grow rapidly in the future.
Founded in 1993, the Group’s management team possesses extensive operating experience, industry knowledge and know-how in the orange juice processing industry in China.
By operating 2 processing plants and 23 leased orange farms, Tianyi Fruit adopts a vertically integrated business model which not only enables it to have control over quality and quantity of orange supply, but also gives it competitive advantage over the pricing of its products. As a result, the Group managed to achieve a relatively stable gross profit margin and net profit margin in the past three years.
In anticipation of growing demand for FCOJ and with an objective to diversifying sources of oranges, the Group plans to set up a new production plant in Chongqing, which will help to increase the Group’s current FCOJ production capacity to 18,200 tonnes by 2009. The Group also plans to expand the total area of the orange farms in the future. The proposed listing will provide additional funding to support the Group’s expansion plan.
Net proceed from the Share Offer, based on the mid-point of the offer price range, will amount to HK$141 million. The Group intends to use approximately 73.1 per cent of the net proceeds or HK$103 million for acquiring land use rights, plant construction, purchase and installation of production and processing equipment; approximately 16.3 per cent or HK$23 million will be used for expanding the total area of the orange farms; and the remaining amount will be applied for the enhancing marketing activities, expanding the coverage of sales network, improving the orange planting technology, further developing technological know-how on production of fruit concentrate products and as general working capital.
Evolution Watterson Securities Limited is the international co-ordinator, bookrunners, sponsor and lead managers for Tianyi Fruit’s listing.
Tianyi Fruit’s prospectus and application forms will be available starting on Monday, 30 June 2008, and application lists will be closed at noon on Friday, 4 July 2008. Industrial and Commercial Bank of China (Asia) Limited is the receiving bank of the public offer. Dealings in the shares of Tianyi Fruit on the Main Board will commence on Thursday, 10 July 2008.