Offering Details
Macau E&M Holding plans to offer a total of 125,000,000 Shares (comprising 103,100,000 new Shares and 21,900,000 Sale Shares), among which, 90% or 112,500,000 Shares will be for International Placing (subject to reallocation), while 10% or 12,500,000 Shares will be for the Hong Kong Public Offering (subject to reallocation) at an indicative Offer Price ranging from HK$1.00 and HK$1.20 per Offer Share
The Hong Kong Public Offering will commence at 9:00 a.m. on 31 August 2020 (Monday) and end at 12:00pm on 3 September 2020 (Thursday). The final Offer Price and results of allocation will be announced on 10 September 2020 (Thursday). Trading of the shares of Macau E&M Holding will commence on the Main Board of SEHK on 11 September 2020 (Friday) under the stock code 1408. Shares will be traded in board lots of 2,000 Shares each.
Innovax Capital Limited is the Sole Sponsor while Innovax Securities Limited is the Sole Global Coordinator, the Sole Bookrunner and one of the Joint Lead Managers of the Global Offering.
Investment Highlights
An integrated E&M engineering services works contractor in the public and private sectors in Macau with an established track record
The Group is an E&M engineering services works contractor in Macau. According to the Industry Report, the Group ranked fifth among the E&M engineering services works contractors in Macau . The Group has been registered with DSSOPT as a licensed contractor to provide comprehensive E&M engineering services works in Macau, and to carry out E&M engineering services works for various government departments and other public works. In addition, the projects undertaken by the Group for the Macau government or other public bodies in Macau are a testament to the quality, reliability and value of its services, which has helped to build and consolidate the Group's reputation and goodwill in the Macau construction industry as an E&M engineering services works contractor with a strong track record in performing public works. Leveraging on the reputation and goodwill of the Group in the public sector, the Group's services has been expanded to the private sector projects on world class hotels and integrated entertainment resorts. As at 30 June 2020, the Group had 63 projects on hand.
Providing integrated and comprehensive E&M engineering services solution to customers
The Group's comprehensive E&M engineering services include the supply, installation, testing and commissioning of system works across various key aspects of the E&M engineering services works spectrum such as (i) LV systems works; (ii) HVAC systems works; and/or (iii) ELV systems works. The Group also has the technical know-how to carry out maintenance and repair services for customers. Since its inception in 2011, the Group has expanded from the provision of different types of E&M engineering services works in the public sector, to gradually involving in the more lucrative private sector first as a subcontractor and later as a main contractor. The Group's integrated and comprehensive E&M engineering services solution allows its customers to exert efficient control on costs, time and resources, saving them from having to engage different contractors to complete the various works required by any given project.
Established strong and stable relationships with customers as well as subcontractors and suppliers
The Group is an established E&M engineering services works contractor in Macau. Leveraging on the Group's high qualities, diversified and comprehensive capabilities and market reputation, the Group has established strong and stable business relationships with a number of major customers that are main contractors as well as project owners, ranging from two to eight years. As part of the integrated and comprehensive E&M engineering services solution, the Group has also provided maintenance and repair services to customers which allows the Group to establish and reinforce a stable customer base by maintaining a constant flow of communications with its customers. In addition, the Group has maintained a list of approved suppliers and subcontractors and has established good and long term relationships with these suppliers and subcontractors.
Business Strategies
Strengthening the financial position to further develop the capability as main contractor and/or to participate in more large-scale construction projects
In order to grow the business further and capture a larger market share to improve the profitability, the Group will strengthen its financial position to increasingly assume the role of main contractor for E&M projects and/or participate in more large-scale construction projects. In addition, the Group will also gain opportunities to establish stronger and long-standing relationships with project owners through direct collaboration, which will possibly lead the Group to more future business opportunities. Leveraging on its rich experience in the E&M engineering services works, the Group also plans to undertake large-scale construction projects which involve E&M engineering services works specialties.
Expanding the workforce by recruiting additional skilled professionals and labour
There is a general scarcity of skilled labour in the Macau construction market, in particular, professionals such as engineers. As such, the Group's capacity in taking up E&M projects, to a large extent, depends on the number of direct skilled professionals and workers the Group is able to recruit. The Group will consider expanding its current project management team, in particular by recruiting additional project managers and engineers of skills and experience, which will allow the Group to better manage and control the project programme of various large-scale E&M projects undertaken by the Group at the same time and enable the Group to supervise and monitor the works of workers and subcontractors at different project sites simultaneously, thereby further develop its capacity to undertake more sizeable E&M projects at any one time while adhering to the quality and reliability of its E&M engineering services works. In addition, the Group further considers that maintaining and expanding a stable pool of skilled workers will provide the Group with the flexibility to take up E&M projects by deploying and utilising its own workforce and reducing the need to subcontract the works as well as allowing the Group to undertake more projects at a given time, which will therefore increase the Group's overall profitability. Hence, to ensure that the Group continues to perform at a competitive level and is well-positioned to undertake more E&M projects of larger scale, the Group plans to recruit additional RPEs and other members of staff.
Acquiring construction machineries and equipment to facilitate the business expansion plans
Depending on the scope of works of each project, the Group generally leases machineries and equipment to carry out the works. The Group generally takes into account the following factors when determining whether to lease or purchase certain lease machineries and equipment, including (i) rental and purchase cost, (ii) utilisation rate, (iii) estimated useful lives, (iv) storage, frequency of maintenance and repair needs, (v) requirement of the projects, and (vi) availability of the machineries for rental in the market. In view of the above factors, the Group will acquire additional machineries and equipment in order to pursue the business strategies and capture the future growth in the Macau construction industry.
Use of Proceeds
Assuming an Offer Price of HK$1.10 per share (being the mid-point of the indicative Offer Price range), the net proceeds from the Global Offering (after deducting underwriting fees and commission and estimated expenses in connection with the Global Offering) are estimated to be approximately HK$60.1 million and will be applied as follows:
Item / Percentage (%)
Funding specific material costs and upfront expenditure (excluding performance
bonds) of certain projects on hand and the Specific Tendered Projects: 63.6
Financing the issuance of performance bonds: 22.1
Expanding the workforce: 11.0
Acquiring additional machineries and equipment: 3.3
Total: 100.0
Financial Performance Year ended 31 December Two months ended 28/29 February
(MOP$'000) 2017 2018 2019 2019(unaudited) 2020
Revenue 160,752 218,254 237,680 44,967 48,513
Gross Profit 43,305 50,078 53,097 11,246 11,901
Profit before tax 34,478 32,395 45,994 9,506 9,251
Profit and total comprehensive income for the year/period 29,850 27,430 40,538 8,429 8,099
About Macau E&M Holding Limited
Macau E&M Holding is an established E&M engineering services works contractor. The Group provides a comprehensive mix of E&M engineering services works based on the needs of customers in Macau, which generally involve a combination of the supply and/or installation of (i) LV systems works; (ii) HVAC systems works; and/or (iii) ELV systems works, and the relevant testing and commissioning thereof as well as management and monitoring of quality and delivery of E&M engineering services works. For more information about Macau E&M Holding, please visit the Group's website at www.macauem.com.
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