Ying Hai Group Holdings Company Limited to Raise a Maximum of Approximately HK$72 Million by Way of Public Offer and Placing

Highlights

• A wholesale licensed travel agent and a car rental services provider based in Macau

• One of the two companies in Macau which is able to provide both travel agent services and self-drive rent-a-car services

• Sold and distributed approximately 124,000, 151,000 and 52,000 hotel rooms of over 40, 40 and 35 hotels in Macau, respectively, for FY2017, FY2018 and 4M2019

• Sold and distributed approximately 52,000, 63,000 and 19,000 hotel rooms of L'Arc Hotel　Macau during the Track Record Period

• Granted three out of 40 permits by the Transport Bureau of Macau, each of which allows one vehicle for crossing the Hong Kong -- Zhuhai -- Macao Bridge (HZMB), and

• Plans to commence its point-to-point cross-border transportation services between Macau and Hong Kong in the fourth quarter of 2019

 

Financial Highlights

	For the year ended 31 December		For the four months ended 30 April
	2017	2018	2018	2019
	HK$'000	HK$'000	HK$'000 (unaudited)	HK$'000
Revenue	117,628	165,662	53,265	62,157
Gross profit	26,780	34,688	12,136	13,549
Profit before tax	20,901	18,863	9,105	3,496
Profit for the year/period attributable to owner of the Company	18,218	16,276	7,911	2,893

 

HONG KONG, CHINA - Media OutReach - 12 September 2019 - Ying Hai Group Holdings Company Limited ("Ying Hai Group", together with its subsidiaries, the "Group"; stock code: 8668), a wholesale licensed travel agent and a car rental services provider based in Macau, announces the details of its plan to list on the GEM of The Stock Exchange of Hong Kong Limited ("SEHK") today.

 

A total of 300,000,000 shares will be offered under the Share Offer, of which 270,000,000 Shares (subject to reallocation) or 90%, will be offered by way of Placing; while the remaining 10%, or 30,000,000 Shares (subject to re-allocation) will be offered under the Public Offer. The Offer Price per Offer Share is expected to be not less than HK$0.20 and not more than HK$0.24. The Public Offer will commence at 9:00 a.m. on 13 September 2019 (Friday) and close at 12:00 noon on 18 September 2019 (Wednesday). The final offer price and allotment results are expected to be announced on 25 September 2019 (Wednesday). Dealings in the shares of Ying Hai Group on the GEM of SEHK are expected to commence on 26 September 2019 (Thursday).

 

Assuming an Offer Price of HK$0.22 per Offer Share (being the midpoint of the Offer Price range), the aggregated net proceeds from the Share Offer, after deducting related expenses, will be approximately HK$37.0 million. Ying Hai Group intends to use these net proceeds for the following purposes: 1) approximately 52.9% will be used for expansion of its car fleet; 2) approximately 16.2% will be used for expansion of its business by cooperating with more hotel operators; 3) approximately 17.4% will be used for increasing its marketing and expansion of its sales channel; 4) 4.1% will be used for improving the efficiency of its operation; 5) approximately 6.6% will be used for expansion of its workforce; 6) approximately 2.8% will be used as its general working capital.

 

Lego Corporate Finance Limited is the Sole Sponsor. Lego Securities Limited is the sole bookrunner. Lego Securities Limited and Great Roc Capital Securities Limited are the joint lead managers.

 

Industry Overview

According to the Macau Tourism Industry Development Master Plan, for a high visitor growth scenario, the number of tourist arrivals is expected to grow by approximately 3% to 5% per annum till 2025, thus leading to an expected growth in demand for travel agent services. From 2018 to 2022, the revenue of travel agents is expected to increase from approximately MOP8,506.2 million in 2018 to approximately MOP10,401.0 million in 2022 at a CAGR of approximately 5.2%, mainly driven by Macau's government's initiatives and upgraded infrastructure, including the opening of HZMB.

 

The degree of competition of the travel agent industry in Macau is relatively high and is fragmented with 227 travel agents as at 30 June 2019. The Group recorded revenue (excluding the revenue generated from the Multi-purpose Car Rental Services) of approximately HK$117.6 million and HK$160.3 million, accounting for a market share of approximately 1.5% and 1.9% to the total revenue of travel agent industry in Macau for FY2017 and FY2018, respectively.

 

Business Overview

The Group is a wholesale licensed travel agent and a car rental services provider based in Macau offering to its customers a range of products and services which include hotel rooms, car rental services and sales and provision of air tickets and other ancillary travel-related products and services. As at the Latest Practicable Date, it had four service points in Macau, which included its headquarters, two on-street shops, and one booth at the Macau Outer Harbour Ferry Terminal.

 

For FY2017, FY2018 and 4M2019, the Group sold and distributed approximately 124,000, 151,000 and 52,000 hotel rooms of over 40, 40 and 35 hotels in Macau, respectively. During the Track Record Period, the Group sold and distributed approximately 52,000, 63,000 and 19,000 hotel rooms of L'Arc Hotel Macau.

 

As at 30 June 2019, a total of four companies in Macau obtained the authorisation to provide self-drive rent-a-car services, of which only two (including Ying Hai Group) were providing both travel agent services and such car rental services. Ying Hai Group has been granted three out of 40 permits by the Transport Bureau of Macau, each of which allows one vehicle for crossing the HZMB. The Group has been liaising closely with different government authorities in Hong Kong in relation to the application for the provision of point-to-point cross-border transportation services between Macau and Hong Kong. It plans to commence its point-to-point cross-border transportation services between Macau and Hong Kong in the fourth quarter of 2019.

 

Competitive Strengths

1)    Established good and stable relationships with key suppliers and customers

The Group has maintained good business relationships with hotel operators in Macau such as L'Arc Hotel Macau and Waldo Hotel Macao to secure sources of its hotel rooms so that the Group can maintain a stable supply of hotel rooms and a high degree of control over the quantity and pricing of hotel rooms available.

 

The Group's stable relationship with its suppliers, some of which have more than four years of business relationship, enables it to secure supply of hotel rooms on a regular basis at a preferential room rate, and stable relationships with its major customers allow it to secure its revenue stream. Such arrangement enables the Group to ensure that some of its hotel rooms purchased from hotel operators are guaranteed to be sold, and lock up some of the profits to reduce the risk of having to reduce the room rate significantly when approaching the check-in dates of unsold rooms.

 

2)    Diversified products and services range to customers

The Group provides one-stop service to its customers with wide variety of products and services ranging from air tickets, visa applications, travel insurance, hotel rooms bookings, entertainment tickets booking, buffet tickets, transportation arrangements including transportation tickets and car rental services, etc., which facilitate its customers to obtain one-stop service without negotiating with different parties. As at 30 June 2019, the Group was one of the two companies in Macau which were able to provide both travel agent services and self-drive rent-a-car services.

 

3)    Diversified range of hotel rooms

For FY2017, FY2018 and 4M2019, the Group has entered into Hotel Rooms Guarantee Agreements with seven, seven and eight hotels in Macau, respectively, pursuant to which it was guaranteed 320, 377 and 396 hotel rooms each day on average, respectively. These hotels range from three stars to five stars as accredited by the Macao Government Tourism Office , offering a wide range of choices for its customers.

 

4)    Diversified customer types

The Group's customers include corporate customers, travel agents as well as individual customers. The diversified types of customers will in turn reduce the risk of overly relying on one single type of customer.

 

5)    Experienced and stable management team

The management team is familiar with the market and is able to guide the Group to react to latest market trends and changes through the development of effective strategies. They are also capable of soliciting business for the Group through their experience and personal network and connections.

 

BUSINESS STRATEGIES

1)    Expansion of its car fleet

The Group is one of the two companies in Macau which are able to provide both travel agent services and self-drive rent-a-car services as at 30 June 2019. It plans to acquire an additional of 20 vehicles and to recruit 20 drivers to meet the increasing demand for in-city Multi-purpose Car Rental Services.

 

2)    Cooperation with more hotel operators and other travel agents and corporate customers in Macau

The Group intends to collaborate with more hotel operators to include mid- and high-tier hotel rooms in order to attract business travellers and high spending customers, so as to generate a higher sales volume and higher revenue from its other services, such as car rental services.

 

3)    Increase its marketing and expansion of its sales channel

The Group plans to establish more service points and develop an online platform in the form of an app to market its travel products and services to corporate and individual customers. With the increasing use of internet for travel booking and in order to correspond with its plan to develop an online sales platform, the Group intends to invest in digital marketing through advertising on social media platforms and search engines with a view to increasing its online channel presence and drive online inquiry.

 

4)    Improve the efficiency of its operation

The Group intends to relocate and merge its existing three offices in Macau into one single office in order to ensure better and more efficient communication as well as better internal collaboration.

 

5)    Expansion of its workforce

In order to cope with the continual expansion of its business, its Group intends to hire 4 new employees in 2019 and 20 drivers with a view to having sufficient manpower to improve its service quality and brand awareness through advertisements and other marketing campaigns.

About the Group

Ying Hai Group is a wholesale licensed travel agent and a car rental services provider based in Macau offering to its customers a range of products and services which include hotel rooms, car rental services and sales and provision of air tickets and other ancillary travel-related products and services. It was one of the two companies in Macau which is able to provide both travel agent services and self-drive rent-a-car services.

 

For FY2017, FY2018 and 4M2019, the Group sold and distributed approximately 124,000, 151,000 and 52,000 hotel rooms of over 40, 40 and 35 hotels in Macau, respectively, to accommodate the needs of various types of customer. During the Track Record Period, the Group sold and distributed approximately 52,000, 63,000 and 19,000 hotel rooms of L'Arc Hotel Macau.