Offering Details

Hingtex intends to offer a total of 160,000,000 shares (the "Offer Shares"), of which 90% or 144,000,000 shares are for Placing (subject to reallocation and over-allotment option) and 10% or 16,000,000 shares are for the Hong Kong Public Offer (subject to reallocation). The indicative Offer Price range is between HK$1.10 and HK$1.40 per Offer Share. After deduction of relevant expenses and assuming an Offer Price of HK$1.25 per Offer Share, being the mid-point of the indicative Offer Price range, and assuming the over-allotment option is not exercised, the net proceeds are estimated to be approximately HK$167.0 million.

The Hong Kong Public Offer will commence at 9:00 a.m. on 28 June 2018 (Thursday) and will end at noon on 4 July 2018 (Wednesday). The final Offer Price and allotment results are expected to be announced on 13 July 2018 (Friday). Dealing of Hingtex's shares is expected to commence on the Main Board of SEHK on 16 July 2018 (Monday) under the stock code 1968. Shares will be traded in board lots of 4,000 shares each.

Shenwan Hongyuan Capital (H.K.) Limited is the Sole Sponsor and Sole Global Coordinator, while Shenwan Hongyuan Capital (H.K.) Limited, SPDB International Capital Limited and I Win Securities Limited are Joint Bookrunners and Joint Lead Managers of the Share Offer.

Investment Highlights

Proven track record in denim fabric manufacturing industry underscores long-term collaborative relationships with US apparel brands and garment manufacturersWith over 36 years of operating history in denim fabric manufacturing and sales, Hingtex ranked seventh and second in the middle- to high-end denim fabric manufacturing industry in China and South China . Hingtex's denim fabrics have unique composition of yarns and dyes, as well as specific production parameters, hence are difficult to replicate by other denim fabric manufacturers. The Group is thus able to produce functional denim fabrics of high and consistent quality which underscores its reputation and recognition from famed US apparel brands with which it has long-term collaborative relationship.

Hingtex has business relationship with over 30 apparel brands and supplied its products to over 120 customers which are mainly garment manufacturers serving apparel brands. It has established longstanding relationships with its top five apparel brand customers ranging from five to 10 years. In particular, the Group has more than seven years of relationship with American Eagle Outfitters ("AEO"), one of the major US denim jeans brands, and received The Innovative Award from AEO in 2016. Ready and able to develop new denim fabrics, which can support apparel brands in product development, Hingtex has a strong foundation for achieving continuous growth.

Strong product design and development capability with quick response to market trends plus stringent quality controlBacked by its highly skilled technicians with thorough understanding of fashion trends plus its strong product development capability, Hingtex adopts a proactive design approach, presenting to apparel brands denim fabrics in the form of garment end-products, such as jeans and denim jackets, so that they may visualise designs that use Hingtex's denim fabrics. Its ability to develop new denim fabrics and improve quality of existing denim fabrics that cater for the changing needs of apparel brands in a timely manner, enables the Group to respond quickly to market trends. Around 500 new denim fabric items were developed by the Group during the Track Record Period.

Besides, the Group has laid down stringent internal control standards and related operational measures that cover the entire production process. The Group's quality management system is ISO 9001:2008 and ISO 14001 certified and quality assurance inspections are carried out by production staff on semi-final and final products to ensure they meet customers' specifications and internal quality standards. By providing high quality denim fabrics that meet the product specifications and design requirements of apparel brands and garment manufacturer customers, Hingtex has built a strong foundation for growth and to attract more potential apparel brands to using its denim fabrics.

Experienced and dedicated management team with stable operational performance and high dividend payout policyHingtex boasts a stable, professional and experienced management team with most members having more than 20 years of industry and management experience. Led by a dedicated management team, the Group delivered sustainable revenue growth at a CAGR of 27.2% during the Track Record Period. The Group intends to declare dividends of no less than 45% of distributable profit for any particular financial year. It will continue to explore new business opportunities and strengthen its leadership in the denim garment fabric market.

Future StrategiesAccording to Frost & Sullivan, the retail value of denim garment market in Europe and the PRC are projected to grow at a CAGR of 7.3% and 8.8% respectively between 2017 and 2021, showing the huge growth potential of the industry. The Group plans to put more effort and resources into enhancing market penetration in the PRC and expanding business into the European market. In the PRC market, the Group will push to strengthen its presence and market share by opening a sales office in Guangzhou in 2019 to coordinate purchase orders from customers. In Europe, the Group intends to replicate the success it has in building business relationship with apparel brands in the US. It has appointed a sales agent in Italy in January 2018 to help with promoting its denim fabrics to and securing purchase orders from customers in the European Union. It will also enhance market presence in Europe by attending international fabric shows.

To maintain continuous business growth, Hingtex will purchase new production machinery to boost its production capacity, enhance production efficiency and its product development capability. It will also continue to develop new denim fabric items and leverage its apparel brand network to stay abreast of market trends and the preferences of target consumer groups in various markets. The Group believes its continuous effort to promote new denim fabric items will fuel revenue growth, help strengthen its business relationship with existing apparel brands by giving them support on product development, and brace its own market expansion plans.

Use of ProceedsThe net proceeds of the Share Offer, based on the Offer Price of HK$1.25 per share (being the mid-point of the indicative Offer Price range) and after deduction of underwriting fees and estimated expenses payable in connection with the Share Offer, are estimated at approximately HK$167.0 million and will be used:

Items / PercentageTo purchase production machinery and equipment: 95.3%To attend overseas and PRC fabric exhibitions to enhance market penetration and expand customer base: 2.2%As general working capital and for other general corporate purposes: 2.5%

Financial Highlights

(HK$'000) Year ended 31 December2015 2016 2017 CAGRRevenue 400,556 475,039 648,219 +27.2%Gross profit 106,445 147,348 212,817 +41.4%Gross profit margin 26.6% 31.0% 32.8% N/AProfit for the year 103,962 91,850 126,478 +10.3%Non-HKFRS adjusted profit* 41,428 71,146 109,534 +62.6%* Excluding certain income and expense items which were not directly attributable to the ordinary course of business of the Group.

About Hingtex Holdings LimitedFounded in 1981, Hingtex is an established denim fabric manufacturer that specialises in design, manufacture and sales of denim fabrics, targeting middle- to high-end market segment. With longstanding relationship with over 30 apparel brands and over 120 customers, the Group primarily supplies denim fabrics for the production of denim garmet of certain reputable US apparel brands. The Group has rich experience in manufacturing a variety of denim fabrics including (i) non-stretchable, (ii) stretchable cotton and (iii) stretchable blended denim fabrics; and would present denim fabrics in the form of garment end-products such as denim jeans, jackets and skirts. Its design and product development capability have been widely recognised by its customers. For more details about Hingtex, please visit the Group's website: www.hwtextiles.com.hk^[1]

Media Enquiries:Strategic Financial Relations LimitedVicky Lee Tel: (852) 2864 4834 Email: [email protected] Kylie Chan Tel: (852) 2114 4990 Email: [email protected] Jessica Siu Tel: (852) 2114 2820 Email: [email protected]Website: www.sprg.com.hk^[2][3][4][5]

Topic: Press release summarySectors: Daily Finance, Daily News^[6][7] http://www.acnnewswire.com From the Asia Corporate News Network

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References

1. ^{^} www.hwtextiles.com.hk (www.hwtextiles.com.hk)
2. ^{^} [email protected] (www.acnnewswire.com)
3. ^{^} [email protected] (www.acnnewswire.com)
4. ^{^} [email protected] (www.acnnewswire.com)
5. ^{^} www.sprg.com.hk (www.sprg.com.hk)
6. ^{^} Daily Finance (www.acnnewswire.com)
7. ^{^} Daily News (www.acnnewswire.com)