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Thursday, 28 November 2019, 17:35 HKT/SGT
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Source: Maike Tube Industry Holdings Limited
Maike Tube Industry Holdings Limited Announces Details of Proposed Listing on the Main Board of The Stock Exchange of Hong Kong Limited
Share Offer of 98,400,000 Shares
Offer Price Ranges from HK$1.86 to HK$2.40 Per Offer Share

HONG KONG, Nov 28, 2019 - (ACN Newswire) - Maike Tube Industry Holdings Limited ("Maike Tube" or "Group"), a manufacturer and distributor of standard prefabricated pipe nipple and steel pipe products, announced today the details of its proposed listing on the Main Board of The Stock Exchange of Hong Kong Limited ("SEHK"). According to Frost & Sullivan Report, the Group ranked first in the PRC standard prefabricated pipe nipple industry in terms of export value by tons in 2018.




Offering Details

Maike Tube intends to offer a total of 98,400,000 shares, 88,560,000 of which for International Placing (subject to reallocation) and 9,840,000 for Hong Kong Public Offer (subject to reallocation). The indicative Offer Price range is between HK$1.86 and HK$2.40 per Offer Share. After deduction of underwriting fees and estimated expenses payable in connection with the Global Offering, and assuming the Offer Price of HK$2.13 per Offer Share (being the mid-point of the indicative Office Price range), the net proceeds are estimated at approximately HK$167.3 million.

The Hong Kong Public Offer will begin on 29 November 2019 (Friday) at 9:00a.m. and end at noon on 9 December 2019 (Monday). The final Offer Price and allotment results is expected be announced on 17 December 2019 (Tuesday). Dealing of Maike Tube's shares is expected to commence on the Main Board of SEHK on 18 December 2019 (Wednesday) under the stock code 1553 and in board lots of 2,000 shares each.

Fortune Financial Capital Limited is the Sole Sponsor of the listing, with Fortune (HK) Securities Limited as the Sole Global Coordinator, and Fortune (HK) Securities Limited, Livermore Holdings Limited, Zhongtai International Securities Limited and First Shanghai Securities Limited as the Joint Bookrunners and Joint Lead Managers.

Investment Highlights

Provide high quality standard prefabricated pipe nipple and steel pipe products of different specifications that meet international and mainland standards
The Group has put in place a stringent quality control system that covers the entire production process, from selection of suppliers, procurement of raw materials, production, quality and reliability assurance to maintenance of production equipment and machineries. Its quality control capability has been accredited with ISO 9001, ISO 14001 and OHSAS 18001, among others. It is also armed with a comprehensive range of quality control machinery (including hydrostatic testing machine, x-ray inspection and spectrum analysis instrument) to further strengthen its quality control capability and ensure product quality, allowing it to effectively rectify any quality defects. At the same time, Directors' of the Group believe the quality of its products is reflected by the registration and approval from notable organisations in different countries, such as the certificates issued by the API of the United States and the Standards of Institution of Israel.

Moreover, the Group is able to put out standard prefabricated pipe nipple and steel pipe products that meet more than 20 international standards, such as ASTM A733 and ANSI C80.1 for standard prefabricated pipe nipple products and ASTM A53 and Israel Standard No. 4314 for steel pipe products, thus satisfy the needs of customers from different countries. Leveraging its production team's expertise and experience, by planning production schedule in advance and using ERP software to optimise production plans, it has helped enhance production efficiency and assure production quality, as well as lower production costs to meet customer demand.

Profound industry knowledge and expertise enable offer of customised steel pipe products of different specifications to accommodate customers' requirements
With its technical personnel boasting expertise and experience, the Group is capable of making adjustments to cater for specific requirements of products, in terms of different specifications and standards, in manufacturing customised steel pipe products, for use even in unusual geographic environment and climate. Also, it is capable of designing for customers and supplying to them assembled piping systems. It uses BIM and three-dimensional design system to offer customers technical advice or suggestions regarding the design of and/or engineering solutions for their desired assembled piping systems, helping customers minimise wastage of material and in turn production costs. With the ability to provide customised steel pipe products and design and supply of assembled piping systems, the Group can accommodate different customers' requirements efficiently, and at the same time allowing them to save the cost of procuring steel pipe products from different manufacturers, which is a competitive edge setting the Group apart in the industry.

Strong R&D capabilities and granted the High and New Technology Enterprise
The Group has kept abreast of technological innovations, continuously providing high-quality services to customers and enhancing efficiency and productivity, plus has accumulated rich technological experience in standard prefabricated the pipe nipples and steel pipe industries. Jinan Mech and Jinan Ma Steel have also been accredited as the High and New Technology Enterprises by the Department of Science & Technology of Shandong Province. As at 31 May 2019, the Group was supported by a dedicated team of 102 research and development staff, responsible for discussing with customers to understand their needs and requirements, and turn customers' design concepts or ideas into deliverable and commercialised product, as well as recommend suitable product specifications and design enhancement, and in turn allowing the Group to secure more purchase orders and expand customer base in the long term. For the three years ended 31 December 2018 and the five months ended 31 May 2019, it had been involved in a total of 71 research and development projects.

To meet the more demanding market trend for standard prefabricated pipe nipples and steel pipe products, the Group intends to increase the application of functionalised technology and developed equipment tailored to its manufacturing process and products. As at the Latest Practicable Date (20 November 2019), the Group had obtained 59 patents which included 14 invention patents, 40 utility model patents and 5 design patents in the PRC. In addition, the Group's research and development capabilities are also highly recognised in the industry in the PRC. During the track record period, the Group had participated in establishing the domestic standard CJ/T120 for plastic coated steel pipes for water supply and was also invited to establish the group standard T/CNHA1018 spiral steel pipe nipples, which was published in April 2019.

Stable and diversified customer base
Over the years, the Group has built a solid and stable customer base worldwide. During the track record period, the Group had more than 320 customers from over 35 overseas countries. Its top five major customers are direct sellers, wholesalers or distributors in the gas and energy, HVAC and fire protection fields. The Group has stable and long-term business relationship with customers and collect their feedback on the quality of its product from time to time to help improve products and operations, as well as future development, aiming to deliver consistently high quality products and services to customers on time and effectively.

Future Growth Strategy

The Group will purchase three new production lines for manufacturing of ERW steel pipes (two welding production lines and one coating production line) to enhance production capacity and product quality, to cope with the growth of ERW steel pipes manufacturing industry. The production lines are expected to commence commercial operation in the third quarter of 2020. At the same time, one of the SSAW steel pipe production lines will be replaced to increase capacity with operation expected to start before the fourth quarter of 2020. The new production line will not only have output capacity double that of before, but have a higher level of automation and can manufacture a wider range of products, which will enable the Group to further broaden its product portfolio and reduce labour costs.

Furthermore, as labour cost, tax rates and other operation expenses are lower in Vietnam, the Group will acquire three additional production lines in the existing production facilities there for producing standard prefabricated pipe nipples. The new production lines scheduled to begin operation by the fourth quarter of 2020 are expected to add about 2,000 tons to the annual output, approximately 7.3% more than the amount now, enabling the Group to further capture the growth of the standard prefabricated pipe nipple products market.

To enrich its existing business portfolio, the Group also intends to expand business horizontally by acquiring other manufacturers in the same industry. It expects to identify acquisition target by the third quarter of 2020 and complete the acquisition by the first quarter of 2021.

The Group will also continue to improve its research and development capabilities in different areas such as product quality, product design and diversity, and improving production efficiency for the assembly process and reducing costs. Furthermore, it will strive to keep pace with latest technologies and develop new products that address prevailing and expected changes in the market, ensuring the products can be used by customers in unusual geographic environment and extreme climate conditions, even able to tolerate frequent natural disasters, as well as provide design and engineering solutions to customers.

Use of Net Proceeds

Assuming the Offer Price is fixed at HK$2.13 per Offer Share (being the mid-point of the indicative Offer Price range), the net proceeds from the Offer are estimated at approximately HK$167.3 million, after deducting underwriting fees and estimated expenses payable for the Global Offering, and will be used as follows:

Purpose / Percentage
- Add three new production lines, enhance production capabilities of ERW steel pipes: 19.0%
- Upgrade one of the SSAW steel pipes production lines: 22.3%
- Set up new production facility for SSAW production facilities: 9.4%
- Acquire three additional production lines in the production plant in Vietnam: 9.4%
- Expand business horizontally through acquisition / collaboration: 10.0%
- Invest in four research and development projects: 10.0%
- Repay part of borrowings: 10.0%
- General working capital: 9.9%
Total: 100%

About Maike Tube Industry Holdings Limited
Maike Tube Industry Holdings Limited engages principally in manufacturing and selling of standard prefabricated pipe nipple and steel pipe products. It also designs for customers and supplies to them a range of assembled piping systems. The Group operates two production plants in Jinan, the PRC and one production plant in Dong Nai Province, Vietnam. Most of the Group's customers are in Mainland China and the rest are in more than 35 countries overseas. According to Frost & Sullivan Report, the Group ranked first in the PRC standard prefabricated pipe nipple industry in terms of export value by tons in 2018.

Media Enquiries
Strategic Financial Relations Limited
Vicky Lee Tel: (852) 2864 4834 Email: [email protected]
Becky Liu Tel: (852) 2864 4864 Email: [email protected]
Corinne Ho Tel: (852) 2114 4911 Email: [email protected]



Nov 28, 2019 17:35 HKT/SGT
Topic: Press release summary
Sectors: Daily Finance, Daily News
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