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Monday, 17 June 2019, 18:40 HKT/SGT
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Source: Feiyang International Holdings Group Limited
Leading Travel Service in Zhejiang, Feiyang International Holdings Group Limited announces details of listing on the HKEx Main Board

HONG KONG, June 17, 2019 - (ACN Newswire) - Feiyang International Holdings Group Limited ("Feiyang Group" or the "Group"), the well-known quality travel products and services provider in Zhejiang, the PRC, today announced the details of its listing on the Main Board of the Stock Exchange of Hong Kong Limited ("SEHK") under the stock code of 1901.

Highlights
- Feiyang Group is a leading diverse travel product and service provider in Zhejiang Province
- The Group affords strong revenue growth, with FIT products accounting for an increasing share of its total revenue and having widening margins, lifting steadily its revenue, gross profit and gross profit margin.
- With its proprietary "4+T" service system, the Group uses information technology to provide customer service and private consultation, as well as to manage its products and tour operation, allowing it to deliver personalised and high quality services.
- Policies advocated by the Central Government including the "Internet Plus" concept, "Guiding Opinion on Vigorously Advancing the 'Internet Plus' Action" and "Internet Plus Tourism" regulations etc., have presented the online tourism industry a sound environment to further develop.
- The Group plans to upgrade its information technology system to build direct connect with budget airline operators and international GDS service providers, as well as to increase the deposits and prepayment to air ticket suppliers, integrating upstream resources and striving to develop online and FIT product services and boost sales.

Offering Details
Feiyang Group intends to offer a total of 125,000,000 shares ("Offer Shares"), 90% of which will be for international placing (subject to adjustment and over-allotment option) and the remaining 10% will be for public offer in Hong Kong (subject to adjustment according to the clawback mechanism). The indicative offer price range is between HK$1.00 and HK$1.10 per Offer Share. Assuming an offer price of HK$1.05 per Offer Share, being the mid-point of the indicative offer price range, and that the over-allotment option is not exercised, the Group expects to receive net proceeds of approximately HK$87.7 million from the listing after deducting related expenses. With the minimum subscription being 2,000 shares, at the high-end price of HK$1.10 per Offer Share, plus 1% brokerage, 0.0027% SFC transaction levy and 0.005% Stock Exchange trading fee payable for each Offer Share, each board lot of 2,000 Offer Shares will worth HK$2,222.17.

Ning Shing (Holdings) Company Limited, Junan Resources (Hong Kong) Co., Limited and WWPKG Holdings Company Limited have each signed cornerstone investment agreement with the Group and also the sole global coordinator to become cornerstone investors. Based on the mid-point of the indicative offer price range, the three companies have agreed to subscribe 23,808,000, 9,522,000 and 4,760,000 Offer Shares at HK$25 million, HK$10 million and HK$5 million respectively, representing 4.8%, 1.9% and 1.0% of the Group's enlarged issued share capital (assuming over-allotment option is not exercised).

Public Offer in Hong Kong will start at 9 am on 18 June 2019 (Tuesday) and end at 12 noon on 21 June 2019 (Friday). The final offer price and allotment results will be announced on 27 June 2019 (Thursday). Trading of shares of Feiyang Group will start on 28 June 2019 (Friday) on the Main Board of HKEX.

Giraffe Capital Limited is the Sole Sponsor, Sole Global Coordinator, one of the Joint Bookrunners and Joint Lead Managers of the global offering, and Crosby Securities Limited and Mason Securities Limited are the Joint Bookrunners and Joint Lead Managers.

Investment Highlights
Quality "one-stop" online travel service provider
The Group cooperates and collaborates with different travel service suppliers (airline operators, ticketing agents, hotel operators, land operators and GDS service providers, etc.) and owns various upstream resources, thus it is able to offer travel products and services that covers food, accommodation, transportation, sight-seeing, shopping and entertainment. Customers can access to all-round travel information and a wide array of products and services, ranging from search and booking of different types of air tickets, related follow-up, to consultation and itinerary customisation services, all on one online platform satisfying all their needs.

Provide professional, quality and personalised services via multiple channels
The Group is committed to providing professional, quality and personalised services to customers via online and offline channels. For offline channels, the Group has a Tourism Square (its headquarters), in Ningbo, Zhejiang Province, for customers to contact customer service staff and travel consultants for enquiries, reservations and purchasing travel products and services. In addition to services provided by its headquarters, the Group also has 28 points of sales in a number of cities in the PRC, where one-on-one travel consultation services are available to customers. As for online channels, with its proprietary "4+T" service system, the Group is able to use information technology to serve customers and provide them with private consultation service; while for the Group itself, to manage products and tour operation. The Group will regularly update its website and mobile application to include latest tours and itineraries, discounts and pricing information. Customers can also purchase travel products and services of the Group at its virtual shops set up on third party online sales platforms, such as Fliggy and Qunar. With the support of the Group's "4+T" service system and services offered by its travel consultants, customers can enjoy one-on-one travel consultation service and professional, quality and personalised services that tailored for their travel needs.

Diverse product and service offerings
The Group offers diverse travel products and services to accommodate various customer needs. 1) Diverse travel products: Boasting solid business relations with suppliers including airline operators, ticketing agents, hotel operators, GDS service providers and land operators etc., the Group offers a broad range of travel services such as one-on-one travel consultation services, air ticket booking services, hotel and accommodation reservation services, visa application services, transportation arrangement services, conferencing services and tourist attractions admission tickets booking services; 2) Diverse choices of travel destination: The Group offers travel products covering more than 50 destinations worldwide ; 3) Wide array of package tours: The Group offers different sight-seeing package tours, theme package tours and tailor-made package tours, such as family travel tours, cultural heritage tours, photography tours and gourmet tours, etc.; 4) Flexible sales modes: The Group is capable of bundling domestic and/or international air tickets with different hotel accommodations.

Possess profound information technology insights and relevant technology
With profound information technology insights and relevant technology, the Group has strong backing in developing its online FIT Product business in the future. The Group operates its own online platform for selling own-brand travel products and services. Its travel technology services team develops proprietary program for internal application interface to connect with suppliers' data flow, enabling linkage between the Group's reservation engine and local suppliers for search and price comparisons of discount air tickets throughout the day. The Group also subscribes and gains access to services from GDS service providers, allowing it to obtain information and procure air tickets from international airlines. This enables the Group to source air tickets at the lowest price from its various suppliers. Moreover, the Group has developed software to support third-party online booking platforms, making immediate connection with online travel agencies, in order to attract customers quickly and effectively.

Experienced and dedicated management team
All executive directors of the Group have over eight to 30 years of experience in their respective professional field. The Group's Executive Director and Founder Mr. He Binfeng completed his bachelor's study in tourism economics at Hangzhou University in the PRC and has over 24 years of experience in the travel industry. A key factor contributing to the Group's success is the invaluable knowledge, experience and insights of the entire management team in the travel industry.

Future Strategy
As the Chinese economy continues to grow, per capita annual disposable income has kept rising. According to a relevant F&S report, for the tourism market as a whole, the total number of travellers in the PRC (outbound and domestic) is expected to increase at a CAGR of 5.4% between 2018 and 2022 (the Period"). As for the FIT Product market, with tourism infrastructure and facilities gradually improving, FIT products have become more and more attractive to Chinese tourists. The report predicted the number of Chinese FIT Product tourists (outbound and domestic) to grow at a CAGR of 5.4% for the Period. At the same time, with the PRC government pushing forward the "Internet Plus" concept and introducing a series of favourable policies for the development of online tourism, plus the fact that more and more people are going online to purchase budget airline tickets as well as travel products and services via online travel agencies and third party online platforms, the report forecasted the online transaction amounts of package tours and FIT Products to be growing at CAGR (outbound and domestic) of 20.2% and 19.6% respectively between 2018 and 2022.

Feiyang Group believes that, to grasp the huge growth potential of the Chinese tourism market as well as the opportunities brought by the growing popularity of FIT Products and online tourism, it needs to broaden and improve its sales channels in the future, expanding online sales and budget airline ticket sales businesses and pushing to enlarge its market share.

The Group intends to use the proceeds from listing to increase the deposits and prepayments to air ticket suppliers in order to secure assignment of electronic ticket numbers and ticketing authority, thereby ensuring that it has sufficient supply of air tickets to customers during peak seasons. It will also upgrade its information technology infrastructure and develop its own information technology system to link up directly with budget airline operators and international GDS service providers, so as to enhance its capability to consolidate upstream resources, boost online sales and budget airline ticket sales. Furthermore, the Group plans to set up new retail branches and sales points in coastal cities in Eastern China, such as Hangzhou and Shanghai. It will also step up sales and marketing efforts on the Internet, social media and use its App to enhance brand recognition and awareness, so as to capture the PRC tourism market with immense growth potential.

Financial Summary

For the year ended 31 December
(RMB'000) 2016 2017 2018
Overall revenue 410,115 464,844 492,851
Gross profit 69,164 89,703 106,660
Gross profit margin 16.9% 19.3% 21.6%
Profit for the year 18,015 29,947 32,833*
Profit margin for the year 4.4% 6.4% 6.7%*
*Excluding listing expenses

Use of Proceeds
Assuming an Offer Price of HK$1.05 per Share (being the mid-point of the Offer Price range) and assuming the Over-allotment Option is not exercised and, after deduction of underwriting fees and other estimated expenses related to the Global Offering, net proceeds from the Global Offering are estimated to be approximately HK$87.7 million and are to be used as follows:

Items / Percentage
Increase deposits and prepayments to air ticket suppliers, in exchange for sufficient ticketing authority, assignment of electronic ticket numbers and/or better terms a policies for air ticket: 35.0%
Increase market share by expanding and improving sales channels: 20.0%
Upgrade information technology system: 10.0%
Enhance brand recognition and awareness by increasing media marketing effort in tradition media and new media: 10.0%
As general working capital and to repay bank loan: 25.0%

About Feiyang International Holdings Group Limited
With a history of about 18 years, Feiyang International Holdings Group Limited is among the well-known travel service providers in Zhejiang Province, China and also the top 50 travel agencies in the country. It mainly provides package tours, FIT Products and travel-related ancillary products and services. The Group operates 28 retail branches and sales offices in Ningbo, Wenzhou, Taizhou, Hangzhou and Suzhou. It has extnesive cooperations with various popular online travel platforms in the PRC.

Media enquiries
Strategic Financial Relations Limited
Maggie Au +852 2864 4815 Email: [email protected]
Beverly Chiu +852 2114 4329 Email: [email protected]
Website: http://www.sprg.com.hk



June 17, 2019 18:40 HKT/SGT
Topic: Press release summary
Sectors: Daily Finance, Daily News
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