Offering DetailsSterling Group plans to offer a total of 228,000,000 Shares, comprising 200,000,000 New Shares and 28,000,000 Sale Shares (subject to the Offer Size Adjustment Option), among which, 90% or 205,200,000 Shares, comprising 177,200,000 New Shares and 28,000,000 Sale Shares, will be for Placing (subject to reallocation and the Offer Size Adjustment Option), while 10% or 22,800,000 Shares will be for the Public Offer (subject to reallocation) at an indicative Offer Price ranging from HK$0.40 and HK$0.44 per Offer Share

The Public Offer will commence on 9:00 a.m. 29 September 2018 (Saturday) and end at 12:00 noon on 5 October 2018 (Friday). The final Offer Price and results of allocation will be announced on 18 October 2018 (Thursday). Trading of Sterling Group's shares will commence on the Main Board of The Stock Exchange of Hong Kong Limited on 19 October 2018 (Friday) under the stock code 1825. Shares will be traded in board lots size of 10,000 Shares each.

Ample Capital Limited is the Sole Sponsor. Alpha Financial Group Limited is the Sole Global Coordinator. Alpha Financial Group Limited and Great Roc Capital Securities Limited are the Joint Bookrunners and Joint Lead Managers.

Investment HighlightsAbility to manufacture a diversified range of apparel productsBased on the Group's long operating history and experience, it is able to manufacture a wide variety of products for men, women and children, which include jackets, coats, blouses, dresses, suits, skirts, etc. Sterling Group has gained extensive experience in the apparel industry throughout the years and such experience has enabled the Group to expand its product portfolio in recent years. For the year ended 31 March 2017, the Group received orders for the manufacturing of flight crew uniforms for a U.S. airline, thus expanding its product portfolio to cater for the business uniform market. Such ability to diversify product offerings would enable the Group to expand its customer base which would be beneficial to its further expansion and creating long-term growth.

Established long-term relationships with customers who are international apparel brand namesThe majority of the Group's customers are international apparel brands that are headquartered in the U.S. and certain European countries such as the U.K. and Spain. As at 20 September 2018, the Group had maintained business relationships with its customers for a period ranging between approximately two to 21 years. In particular, the Group has established more than 19 years of business relationship with its largest customer with mutual benefits in terms of product and service quality. The bedrock of its long-standing relationship with its customers is its meticulous attention to workmanship and fit and the proven performance it has maintained over the years in product quality, delivery and in general, its responsiveness to the needs of its customers.

Furthermore, the Group's close relationship with its major customers and their positive feedback in respect of its reliable performance would also help it attract new customers around the world which share similar profile and market positioning as its existing customers.

The geographical advantage of its production facilities located in Sri Lanka and the PRCIn early 2017, Sterling Group acquired three production facilities, of which two are located in Sri Lanka and one in Panyu, Guangdong Province, the PRC. Production facilities in Sri Lanka, which are located in Katunayake and Meegoda, provide the Group a competitive advantage, such as competitive cost structure relative to China and other Asian countries, English speaking ability, history of apparel manufacturing experience and the proximity of Sri-Lanka to shipping lane to America and U.K. With the relatively low cost of labour for the production of the Group's generally higher-priced products and geographical advantage in Sri Lanka, the Group would be able to lower its operating costs and generate higher profitability.

The location of the Panyu Factory is advantageous to its operations with access to highly skilled labours for its apparel products, and it also operates as the Group's major technical, sample-making and product development centre. Its proximity to the merchandising function in Hong Kong enables the Group to respond to its customers' needs efficiently and effectively.

Business StrategiesSterling Group intends to strengthen its competitiveness and market position in the apparel manufacturing industry by adopting the following key business strategies:

Building on its long-term relationship with existing customers and diversifying its customer baseThe Group plans to expand its customer base by proactively approaching potential customers for business opportunities through various channels, such as developing a more proactive sales function by hiring sales executives or sales agencies exploring different markets outside of the U.S.

The Group is making significant progress in diversifying its customer base as it had successfully secured orders from three new customers for the year ended 31 March 2017. For the year ended 31 March 2018, its revenue amounted to approximately HK$676.9 million, of which approximately HK$285.3 million and HK$29.1 million was derived from its two new customers, representing approximately 42.1% and 4.3% of its total revenue. Thanks to their higher margin, the Group's gross profit margin increased from 16.1% for fiscal 2017 to approximately 18.2% for fiscal 2018. As at 20 September 2018, the confirmed sales orders from its customers amounted to approximately HK$380.6 million, of which approximately HK$174.7 million and HK$31.3 million were derived from the two new customers, representing approximately 45.9% and 8.2% of its total confirmed sales orders, respectively.

Further upgrade and enhance the Group's production facilitiesThe increase in the Group's production capacity will provide cost-saving opportunities and better control over quality and delivery relative to outsourcing. The Group plans to expand its production facilities by purchasing additional machineries for its production facilities, upgrading its existing machineries and equipment in its cutting department to cope with the planned increase in production, and continuously expanding and refurbishing production facilities. The Group targets to finish the upgrade and enhancement by February 2021.

Continue to pursue strategic acquisitions, investments and alliance opportunities to capture other potential market opportunitiesThe Group has been actively seeking strategic acquisitions and investment opportunities that complement its business, including opportunities that help it expand its sales network, achieve greater synergies and diversify its business risks. For instance, acquiring an additional factory in Sri Lanka would share its overheads and reduce its unit cost of production. As at 20 September 2018, the Group has approached certain potential targets but no legally binding agreement has been reached yet.

Further enhance its information technology systemsThe Group intends to implement an apparel ERP system in order to coordinate among Chiefway International and the Panyu Factory, the Meegoda Factory and the Katunayake Factory, which would enhance the overall efficiency of the Group's operations.

Use of ProceedsAssuming an Offer Price of HK$0.42 per share (being the mid-point of the indicative offer price range), net proceeds from the Share Offer are estimated to be approximately HK$54.4 million and will be applied as follows:

Item / PercentageExpanding and refurbishing production facilities located in Sri Lanka and the PRC: 30%Repayment of outstanding bank borrowings, which were used for the acquisition of three factories: 25%Acquisitions of production facilities: 25%Upgrading information technology system, lean manufacturing and productivity improvement programs: 10%General working capital: 10%Total: 100%

About Sterling Group Holdings LimitedSterling Group Holdings Limited is a woven apparel manufacturer for international apparel brands that are headquartered in the U.S. and certain European countries such as the U.K. and Spain with their products sold around the world. Apart from a diversified product portfolio such as outerwear, bottoms, tops and others, the Group also established its presence in the business uniform market by supplying flight crew uniforms for a U.S. airline in 2016. Headquartered in Hong Kong, the Group operates three production facilities, of which two located in Sri Lanka and one in Panyu,China.

Media Enquiries: Strategic Financial Relations LimitedIris Lee Tel: (852) 2864 4829 Email: [email protected]Patty Yeung Tel: (852) 2114 4990 Email: [email protected]Vivian Lee Tel: (852) 2114 4950 Email: [email protected]Website:www.sprg.com.hk^[1][2][3][4]

Topic: Press release summarySectors: Daily Finance, Daily News^[5][6] http://www.acnnewswire.com From the Asia Corporate News Network

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References

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4. ^{^} www.sprg.com.hk (www.sprg.com.hk)
5. ^{^} Daily Finance (www.acnnewswire.com)
6. ^{^} Daily News (www.acnnewswire.com)