Haina Intelligent Equipment International Holdings Limited to raise a maximum of approximately HK$174 million by way of Public Offer and Placing

HONG KONG,May 20,2020 --

Highlights

A manufacturer engaging in the design and production of automated machines for manufacturing disposable hygiene products,including baby diapers,adult diapers and lady sanitary napkins in the PRC

Operated 16 and six production lines at its Jinjiang Production Base and Hangzhou Production Base,respectively,as at 10 May 2020

Ranked the third in the disposal hygiene product machinery industry in the PRC in terms of revenue with a market share of approximately 4.0% in 2019,according to the Industry Report

Entrusted by the Jinjiang Bureau of Industry and Information Technology to research and develop medical disposable face mask machines,due to the outbreak of COVID-19. The Group believes that there will be a sharp increase in revenue and profit mainly from sales of medical face mask machines for the year ending 31 December 2020

Entered into sales contracts with its customers for the sale and purchase of 24,13,149,13 and two units of baby diaper machine,adult diaper machine,medical disposable face mask machine,lady sanitary napkin machine and underpad machine with aggregate contract values of approximately RMB147.7 million,RMB103.0 million,RMB99.0 million,RMB55.1 million and RMB4.4 million,subsequent to the Track Record Period and up to 10 May 2020

Financial Highlights

For the year ended 31 December

RMB'000

2016

2017

2018

2019

Revenue

112,980

260,985

337,240

377,989

Gross profit

24,376

56,587

76,587

90,619

Profit before tax

10,273

35,678

45,132

36,173

Profit for the year attributable to

owners of the Company

8,627

30,031

38,636

26,423

Haina Intelligent Equipment International Holdings Limited("Haina Intelligent Equipment",together with its subsidiaries,the "Group"; stock code: 1645),a manufacturer engaging in the design and production of automated machines for manufacturing disposable hygiene products,adult diapers and lady sanitary napkins in the PRC,announces the details of its plan to list on the Main Board of The Stock Exchange of Hong Kong Limited ("SEHK") today.

A total of 116,000,000 shares (subject to the Over-allotment Option) will be offered under the Share Offer,of which 90%,or 104,400,000 shares (subject to reallocation and the Over-allotment Option),will be offered by way of Placing; while the remaining 10%,or 11,600,000 Shares (subject to reallocation) will be offered under the Public Offer. The Offer Price per Offer Share is expected to be not less than HK$1.08 and not more than HK$1.50. The Public Offer will commence at 9:00 a.m. on 20 May 2020 (Wednesday) and close at 12:00 noon on 25 May 2020 (Monday). The final offer price and allotment results are expected to be announced on 2 June 2020 (Tuesday). Dealings in shares of Haina Intelligent Equipment on the Main Board of the SEHK are expected to commence on 3 June 2020 (Wednesday).

Assuming an Offer Price of HK$1.29 per Offer Share (being the mid-point of the Offer Price range),the aggregated net proceeds from the Share Offer,after deducting related expenses and assuming the Over-allotment Option is not exercised,will be approximately HK$112.8 million. Haina Intelligent Equipment intends to use these net proceeds for the following purposes: 1) approximately 23.2% will be used for setting up a new research and development centre in Jinjiang,the PRC; 2) approximately 22.2% will be used for strengthening its research and development capabilities,in particular,developing a new product and increasing the efficiency of its existing products such as production speed; 3) approximately 16.2% will be used for increasing its production capacity; 4) approximately 35.1% will be used for increasing the competitiveness of its products through acquisitions; and 5) approximately 3.3% will be used for its working capital and general corporate purposes.

VBG Capital Limited is the Sole Sponsor. Soochow Securities International Brokerage Limited,VBG Capital Limited and Wealth Link Securities Limited are the Joint Global Coordinators and the Joint Bookrunners. BOA MS Capital Limited,DL Securities (HK) Limited,Soochow Securities International Brokerage Limited,TradeMaster Securities (Hong Kong) Limited,VBG Capital Limited,Wealth Link Securities Limited and Zinvest Global Limited are the Joint Lead Managers.

Industry Overview

According to China National Household Paper Industry Association,the total sales value of disposable hygiene products in the PRC has increased significantly from approximately RMB67.1 billion in 2014 to RMB118.9 billion in 2018,representing a CAGR of approximately 15.4%. With the continued expansion of consumer market for disposable hygiene products,the total sales value of disposable hygiene products is expected to increase at a CAGR of approximately 7.3% from 2019 to 2023. The growing sales performance of disposable hygiene products reflects the increase in demand of machinery for production.

According to a Frost & Sullivan Report (the "Industry Report"),attributable to the increasing demand for disposable hygiene product manufacturing resulted from growing acceptance to disposable hygiene product in the PRC market and overseas emerging markets such as Southeast Asia,the sales value of disposable hygiene product machinery in the PRC increased from approximately RMB6.8 billion in 2015 to RMB9.1 billion in 2019,representing a CAGR of approximately 7.6%.

With the continuous expansion of downstream market and regular upgrade and replacement of machinery,the demand for disposable hygiene product machinery in the PRC and overseas markets,including Southeast Asia,India,Pakistan and South Africa,are set to recover from 2021 onward and the sales value of disposal hygiene product machinery in the PRC is estimated to increase at a CAGR of approximately 6.5% from 2020 to 2024,reaching approximately RMB12.0 billion in 2024.

Business Overview

The Group is a manufacturer engaging in the design and production of automated machines for manufacturing disposable hygiene products,adult diapers and lady sanitary napkins in the PRC. During the Track Record Period,the Group designed,developed and produced automated machines for manufacturing disposable hygiene products under its proprietary brand "Haina Machinery". The Group provides comprehensive services to its customers,from collaborating with its customers on product designs,to customising its products based on specifications provided by its customers,conducting quality control,delivering products to customers,installing products for customers and providing after-sales services. According to the Industry Report,the Group was the third largest disposable hygiene product machinery manufacturer in the PRC in terms of revenue with a market share of approximately 4.0% in 2019.

The Group has two production bases in the PRC,namely Jinjiang Production Base and Hangzhou Production Base,with a total gross floor area of approximately 35,400 sq.m. As at 10 May 2020,the Group operated 16 and six production lines in its Jinjiang Production Base and Hangzhou Production Base,respectively. As at 10 May 2020,the Group owned 127 patents in the PRC. Its products were sold in the PRC,Hong Kong and to 16 overseas countries.

Competitive Strengths

1. The Group is one of the market leaders in the disposable hygiene product machinery industry in the PRC with high brand recognition

According to the Industry Report,the Group ranked the third in the disposable hygiene product machinery industry in the PRC in terms of revenue with a market share of approximately 4.0% in 2019. The Group believes that its brand recognition coupled with its market position in the disposable hygiene product machinery industry in the PRC has enabled it to benefit from the growth of the disposable hygiene product machinery markets in the PRC and overseas.

2. The Group has strong research and development capabilities and offer customisation in collaboration with customers on product design and development

As at 10 May 2020,the Group owned 113 utility patents,12 invention patents and two design patents in the PRC. In addition,the Group's products are highly customised as it collaborates with its customers closely at the early stage of the production cycle. This allows the Group to gain insight into its customers' priorities and needs and enables it to be one of the preferred suppliers of some of its customers.

3. The Group has strong manufacturing capabilities with in-depth industry knowledge and a high commitment to quality

As at 10 May 2020,respectively. The Group's commitment to quality,coupled with the customisation it offers to customers,will enable the Group to reinforce its current market position and create new business opportunities in the disposable hygiene product machinery industry in the PRC.

4. The Group has strong and stable relationship with suppliers

As at 10 May 2020,the Group had one to nine years of business relationships with its top five suppliers. The Group believes that its strong and stable relationship with its key suppliers coupled with its manufacturing and design capabilities has allowed it to achieve efficient production for its products,which in turn,has enabled the Group to control its production costs and increase its gross profit margin so that it can offer competitive pricing among its competitors in the disposable hygiene product machinery industry in the PRC.

5. The Group has an experienced management team with high calibre and a proven track record

The Group's experienced management has provided it invaluable visions and knowledge to stay attuned to the competitive environment and effectively manage variability and challenges in the future.

BUSINESS STRATEGIES

1. Continue to strengthen its research and development capabilities to keep abreast of the trend in the industry

The Group intends to acquire a suitable site to set up a dedicated research and development centre (the "R&D Centre") in Jinjiang,Fujian Province,the PRC,and move all its current research and development activities to the R&D Centre,which would provide a dedicated area for it to develop new design of machines and also to support the development of products under its brand "Haina Machinery". The parcel of land on which the new R&D Centre will be built is expected to have a site area up to 16,000 sq.m. with an estimated building area of approximately 11,200 sq.m.

2. Increase production capacity

The Group plans to expand the production capacity of its Jinjiang Production Base by leasing additional production premises with a floor area of approximately 10,000 sq.m. in Jinjiang,which is intended to house,among others,the five new production lines and space for equipment access.

3. Increase the competitiveness of its products through acquisitions

The Group intends to acquire a company engaging in the high-end precision automation equipment development in the production of disposable hygiene product machines,and a company engaging in the development,design and manufacture of automatic packaging equipment. The Group is of the view that acquiring the capabilities to produce precision automation and automatic packaging equipment as early as possible allows it to enhance its competitiveness and satisfy its customers' demand in a timely manner.

4. Deepen its penetration in the disposable hygiene product machinery industry in the PRC and overseas markets

The Group will continue to focus on solidifying its leading market position by deepening its penetration in the PRC's growing disposable hygiene product machinery industry. In addition,the Group intends to leverage on its established corporate brand name and its research and development capabilities to increase resources to attract disposable hygiene product manufacturers in the overseas market,such as Southeast Asia and India where the economy,population and living standard have been growing continuously.

MEASURES ON COVID-19 OUTBREAK

After the outbreak of COVID-19,there is a sharp rise in market demand for medical disposable face mask machines in the PRC and globally. The Group was entrusted by the Jinjiang Bureau of Industry and Information Technology to research and develop medical disposable face mask machines. These machines,which are currently demanded by the Group's customers,are able to command favourable profit margins for the Group based on its unaudited management accounts,have a shorter production time and lower production space requirements,and are currently expected to make significant contributions to its revenue for the year ending 31 December 2020. Up to 10 May 2020,81 face medical disposable face mask machines have been delivered to its customers.

The Group confirms that there had been no cancellation or delays of orders by any of its customers due to the outbreak of COVID-19. The Group will temporarily increase the number of hours worked by each shift and also better cooperate with its suppliers in timely delivery of raw materials so as to catch up with the production schedule of diaper and lady sanitary napkin machines as agreed with its customers.

According to the Industry Report,the growing personal hygiene awareness subsequent to the control of COVID-19 outbreak may further drive the consumption of disposable hygiene product in the PRC,and expedite the upgrade and replacement process of disposable hygiene product machinery by downstream disposable hygiene product manufacturers in the next few years.

About the Group

Haina Intelligent Equipment is a manufacturer engaging in the design and production of automated machines for manufacturing disposable hygiene products,adult diapers and lady sanitary napkins in the PRC. According to the Industry Report,the Group ranked the third in the disposal hygiene product machinery industry in the PRC in terms of revenue with a market share of approximately 4.0% in 2019.

As at 10 May 2020,the Group operated 16 and six production lines at its Jinjiang Production Base and Hangzhou Production Base,respectively. For the four years ended 31 December 2019,the Group's total revenue amounted to approximately RMB113.0 million,RMB261.0 million,RMB337.2 million and RMB378.0 million,respectively.