Offering Details

The Group intends to offer an aggregate of 666,680,000 shares (subject to adjustment and the exercise of an over-allotment option), of which 600,012,000 shares (subject to re-allocation and the exercise of an over-allotment option) are international offer shares and the remaining 66,668,000 shares (subject to adjustment) are Hong Kong public offer shares. After deducting underwriting fees and estimated expenses, and assuming an offer price of HK$1.86 per offer share (being the midpoint of the proposed offer price range between HK$1.50 per share and HK$2.22 per share) and the over-allotment option is not exercised, the estimated net proceeds from the global offering will amount to approximately HK$1,148.4 million.

The Hong Kong public offering will commence on 29 June, 2018 (today) and end at 12:00 noon on 11 July 2018 (Wednesday). The final offer price and the allotment results are expected to be announced on 11 July 2018 (Wednesday). Trading of the shares of 7Road is expected to commence on the SEHK on 18 July 2018 (Wednesday) under the stock code 797, and in board lots of 2,000 shares each.

GF Capital (Hong Kong) Limited and CCB International Capital Limited are the joint sponsors of this listing. GF Securities (Hong Kong) Brokerage Limited, CCB International Capital Limited, Haitong International Securities Company Limited and AMTD Global Markets Limited are the joint global coordinators, joint bookrunners and joint lead managers; while CMB International Capital Limited is the joint bookrunner and joint lead manager.

Business Highlights

Sophisticated Game Development and Data Analytics CapabilitiesAs a leading online game developer and operator based in China, 7Road has engaged in the development, operation and licensing of a number of popular online games since its establishment in 2008, in particular, casual shooting games and strategy role-playing games ("SRPG"). 7Road was the top web game developer in China in terms of revenue generated from proprietary web games in 2017, according to iResearch Report. As of the latest practicable date, it has launched and operated 16 web titles in various language versions, including a number of chart-topping titles. The Group has also strategically expanded its business focuses to develop mobile and H5 games to attract and monetize smartphone users.

The Group owns two core flagship titles, i.e. DDTank and Wartune, which have been well received by the market. Both games have had average monthly active users ("MAUs") of 1,840,000 and 820,000 in 2017 respectively. DDTank (mobile) topped the free-to-download game chart of Apple Inc.'s App Store in China on the date of its launch, and has remained among the top 300 best-selling games as of the latest practicable date. Wartune received "Facebook Staff Favorites Recognition" and was acknowledged as one of the Top Ten Best Web Games in China by the Gaming Industry Committee of the China Audio-video and Digital Publishing Association for three consecutive years from 2012 to 2014.

7Road has established a game development center in Shenzhen that focuses on the initiation, upgrade and optimization of online games. The Group continuously monitors user behavior and feeds gameplay data, such as daily active users and average revenue per paying users, to its game development center through an integrated system, which allows it to effectively analyze critical user metrics generated by its games. The game development center then translates such information into well-timed game enhancements as well as new games, allowing the Group to continuously release upgrades and expansion packs to existing games with new features, avatars and game storylines to maintain user interest and maximize monetization. Currently, the Group's two flagship titles, DDTank and Wartune, have a lifecycle of over nine years and seven years respectively, far longer than the lifecycle of similar game genres. As of the latest practicable date, the Group has launched 15 proprietary games in different formats, followed by over 400 major expansion packs that contain significant game upgrades and improvements, which are further refined by thousands of regular updates. The Group also plans to launch five mobile games, four H5 games and one web game by the end of 2018.

The game development center of the Group had 262 employees as of December 31, 2017, accounted for 77% of its total employees as of the same date. The Group's team members on average have five years of relevant industry experience and more than half have a bachelor's or master's degree.

Strategic Development Plan for Business GlobalizationAccording to iResearch Report, 7Road is the second largest China-based web games developer in terms of total amount paid by overseas users in 2017. Being among a select group of pioneers that ventured into the international arena with Chinese-made online games, the Group possesses extensive experience and valuable know-how to serve a demographically and culturally diverse user community that spans various overseas markets, including Southeast Asia, North America and South America. As of the latest practicable date, the Group's games have been published in over 100 countries and regions. In 2017, the Group's revenue derived from overseas markets amounted to RMB149.3 million, represented 33.5% of its total revenue during the same period.

The Group has established strong localization capabilities to structurally and artistically modify its game offerings, including the use of local language scripts and other in-game features specifically redesigned to meet the differentiated gameplay needs and preferences of users from diverse geographical markets. As of the latest practicable date, the Group offers online games scripted in 21 languages, including simplified and traditional Chinese, English and other major languages. 7Road has built a self-refining localization process as it continues to release localized upgrades for and accumulate experience from the expansion of its geographical reach and global user base.

Strong Capabilities of Utilizing Proprietary Game IPs 7Road has spent a significant amount of time and resources on developing online games. As of the latest practicable date, the Group has registered 196 copyrights for art works, 116 copyrights for software, 211 trademarks and nine patent rights in China as well as 136 trademarks in overseas jurisdictions, including Taiwan, Hong Kong and Macau, and three copyrights for software in the United States. It has also applied for the registration of eight trademarks and three patent rights in China and 24 trademarks in overseas jurisdictions. The Group focuses on the in-house development of new game IPs. 7Road has assembled valuable IP assets since it launched its first web title, DDTank, in 2009. Leveraging the popularity of its game IPs, the Group was among the pioneers from China to enter the overseas markets.

The Group also seeks to outsource attractive IPs from third parties, such as King of Fighters, which led to the development of the proprietary game King of Fighters H5, for boosting the interest of its users. In the process of selection, the Group aims to generate maximum synergies with its existing game IPs.

Strong Partnerships with Premium Game Publishers from around the World7Road has forged strong business ties with a number of premium game publishers worldwide. In China, it has partnered with Tencent, the leading China-based interactive entertainment conglomerate, to publish DDTank (mobile) on their distribution platforms and on Apple Inc.'s App Store. Since March 2017, the Group has also partnered with Garena Online, a leading online game publisher in Southeast Asia, to publish a number of regional versions of DDTank (mobile) in certain Southeast Asian countries and regions. As of the latest practicable date, it has partnered with more than 70 China-based and 30 overseas game publishers to operate online games in China and overseas.

Future Development Plans

7Road plans to strategically expand its business focuses to develop mobile games and H5 games to meet the rising demand by users for gameplay flexibility. The Group has in the pipeline eight proprietary mobile games and two proprietary H5 games. It also plans to launch H5 games including McDull Adventures (H5) and King of Fighters (H5) in the second half of 2018. As well, it will leverage nearly a decade's worth of valuable experience in developing and operating casual shooting games and SRPGs to continue developing new games in such genres. What is more, the Group will seek opportunities to expand its game offerings in these two genres by acquiring relevant companies, IPs or other assets.

With regard to product offerings, the Group aims to continue expanding and diversifying its portfolio through in-house development and collaboration with third parties, including outsourcing attractive IPs from third parties for its game development; operating games developed by third parties; and making equity investment in high-caliber game development studios. Leveraging its data analytics capabilities, the Group plans to place target advertisements in its games for third-party advertisers, as well as to cross-promote its game products based on individual user profile and gameplay data.

The Group will also seek to continue enhancing its presence in existing geographical markets through collaboration with its current local partners and by seeking cooperation with new partners, for example, working with major social networks with high user traffic, such as Facebook, to market its games. At the same time, 7Road will selectively acquire, invest in or pursue strategic partnerships with qualified game developers and game development studios so as to expand its game portfolio and bolster its game development capabilities.

Use of Proceeds

Assuming the offer price is fixed at HK$1.86 per share (being the midpoint of the indicative offer price range), the net proceeds of approximately HK$1,148.4 million from the offer will be used as follows:

Items / PercentageFund the Group's research and development efforts in respect of developing proprietary online games and other IPs: 30%Acquire popular IPs or other related assets from overseas or China-based popular IP providers, or invest in or acquire overseas or China-based popular IP providers: 30%Invest in game developers and publishers: 20%Fund the Group's game publishing business, which includes payments for royalties and commissions in respect of licensed games: 10%Working capital and other general corporate purposes: 10%

Financial Performance

RMB'000 For the year ended December 312015 2016 2017Revenue 375,611 403,151 445,295Gross profit 312,730 359,550 407,414Gross profit margin (%) 83.3 89.2 91.5

About 7Road Holdings Limited7Road Holdings Limited ("7Road" or the "Group") is a leading online game developer and operator in China, and casual shooting games and strategy role-playing games ("SRPGs") are its main focus. It boasts global business coverage with its games in 21 languages published in over 100 countries and regions. The Group's two flagship web game titles, DDTank and Wartune, are market favorites. To date, the Group has launched 15 proprietary games, including 12 web games, two mobile games and one H5 game, and it also has a robust pipeline of ten proprietary games. The Group has strong long-term business relationships with more than 100 premium game publishers worldwide, including Tencent, Garena Online, etc.

Media Enquires:Strategic Financial Relations LimitedCindy Lung Tel: (852) 2864 4867 Email: [email protected]^[1]Rita Fong Tel: (852) 2114 4939 Email: [email protected]^[2]Stephanie Liu Tel: (852) 2864 4852 Email: [email protected]^[3]Fax: (852) 2527 1196

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