Announcement of Initial Public Offering of Shares
Gansu Hongliang Leather Industry Co., Ltd.
Lead Underwriter: Hu Long Securities Co., Ltd.
Special Notice
Gansu Hongliang Leather Industry Co., Ltd. is conducting its initial public offering of shares in accordance with the "Measures for the Administration of Securities Issuance and Underwriting" (revised on December 13, 2013), the "Opinions on Further Promoting the Reform of the New Share Issuance System" (CSRC Announcement [2013] No. 42), the "Interim Provisions on the Public Sale of Shares by Company Shareholders during Initial Public Offerings" (CSRC Announcement [2013] No. 44), and the "Standards for Underwriting Business of Initial Public Offerings" (CFA Announcement [2013] No. 231). This offering will be conducted in conjunction with the relevant regulations published by the Shenzhen Stock Exchange (hereinafter referred to as "SZSE") and China Securities Depository and Clearing Corporation Limited regarding the "Implementation Rules for Offline Issuance of Initial Public Offerings in the Shenzhen Market" and the "Implementation Measures for Online Subscription Based on Market Value in the Shenzhen Market." The offline issuance will be conducted through the SZSE's offline issuance electronic platform, while the online issuance will be implemented through the SZSE trading system. For detailed information regarding offline issuance and online subscription, please refer to the SZSE website (www.szse.cn) for the published "Implementation Rules for Offline Issuance of Initial Public Offerings in the Shenzhen Market" and the "Implementation Measures for Online Subscription Based on Market Value in the Shenzhen Market."
The issuer and the lead underwriter solemnly remind investors to pay attention to investment risks and to invest rationally. Investors are urged to carefully read this announcement and the "Special Announcement on Investment Risks for the Initial Public Offering of Gansu Hongliang Leather Industry Co., Ltd." published on the same day.
Valuation and Investment Risk Reminder
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The issuer operates in the C19 leather, fur, feather, and their products and footwear industry. The average static price-to-earnings ratio for the industry published by China Securities Index Co., Ltd. for the last month is 18.22 times (as of January 15, 2014). Investors should consider this when making decisions. The offering price of 16.18 RMB per share corresponds to a diluted price-to-earnings ratio of 15.25 times (calculated based on the audited net profit for the 12 months from July 1, 2012, to June 30, 2013, excluding non-recurring gains and losses, divided by the total share capital after this issuance), which is lower than the industry's average static price-to-earnings ratio of 18.22 times. However, there remains a risk that the issuer's valuation level (or other valuation indicators) may decline due to various uncertainties, leading to a decrease in stock price and potential losses for new investors.
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The total amount of funds required for the issuer's planned fundraising projects is 265.1179 million RMB. Based on preliminary inquiries and pricing results, the public offering consists of 37.1 million shares, divided into two parts: 18.4 million shares for public issuance and 18.7 million shares for sale by company shareholders. Investors should note that the issuer will not receive any funds from the sale of shares by company shareholders. The specific details regarding the sale of shares by company shareholders can be found in section "V. Sale of Shares by Company Shareholders" of this announcement.
Important Reminders
- Gansu Hongliang Leather Industry Co., Ltd. (hereinafter referred to as "Hongliang Shares" or "the issuer") has received approval from the China Securities Regulatory Commission (CSRC) for its initial public offering of no more than 43.4 million RMB ordinary shares (A shares) (hereinafter referred to as "this issuance") as per CSRC Approval Document [2014] No. 39. The shares are intended to be listed on the Shenzhen Stock Exchange.