Gelonghui, March 13 | Migao Group (09879.HK) issued an announcement. The company plans to sell 225 million shares globally, 22.5 million shares in Hong Kong, China, 22.5 million shares, and 15% overallocation rights; the shares will be offered from March 13 to March 18, 2024, with an expected pricing date of March 19; the sale price will be HK$3.30-4.30 per share, 1,000 shares per lot; Guangfa Finance (Hong Kong) is the sole sponsor; it is expected that the shares will be listed on the main board of the Stock Exchange on March 21, 2024 Listed.
The company is a domestic potash fertilizer company in China. It has procurement, processing and manufacturing capabilities, and sells all kinds of potash fertilizer products, including potassium chloride, potassium sulfate, potassium nitrate and compound fertilizer. According to the 2022 potash sales, the company ranked third among Chinese potash fertilizer companies. According to the same calculation, the company ranked second among fertilizer companies (that is, non-reserve potash companies) in China in 2022 that do not have their own potash resources. The company accounts for about 7.1% of total potash sales in China in 2022. Based on the 2022 sales revenue of potassium chloride, potassium sulfate and potassium nitrate, the company ranked third, fourth and fifth among Chinese potash fertilizer companies, accounting for about 7.0%, 4.0% and 0.3% of total sales revenue of potassium chloride, potassium sulfate and potassium nitrate in China in the same year, respectively. Due to the cessation of production at the company's Chengdu production facility, the company has stopped producing potassium nitrate since January 2019, so it only sold potassium nitrate to customers through resale during the record period.
The Company has entered into a Cornerstone Investment Agreement, according to which Cornerstone investors have agreed to subscribe or facilitate the number of relevant shares to be placed for placement by designated entities (including eligible domestic institutional investors) at the offer price for a total amount of approximately HK$418.5 million, subject to certain conditions. Assuming that the offer price was set at HK$3.80 per share to be offered (that is the median of the indicative offer price range set out in this prospectus), the total number of shares offered to Cornerstone investors would be approximately 111 million shares. Cornerstone investors include Shenyang Xinchang Food Trading Co., Ltd. (a wholly-owned subsidiary of October Rice Field (9676.HK)), Xinhua Technology Co., Ltd. (controlling shareholder of China Heart Link (1866.HK)), Harvest International Premium Value (Secondary Market) Fund SPC (“Harvest”), and Mega Dynamic Group Limited (“Mega Dynamic”) ).
Assuming that the over-allotment rights are not exercised and that the initial offering price is HK$3.80 per share (that is, the median of the indicative offer price range), the company estimates that it will receive approximately HK$713.9 million in net proceeds from the global offering. Approximately 45.2% of the net proceeds from the global sale will be used to build a warehouse and production center in Heilongjiang; about 28.2% will be used to invest in and build the company's new production facilities in Sichuan; about 14.2% will be used to fund the establishment of the R&D center (“Sichuan R&D Center”); about 6.0% will be used to purchase new equipment and machines for the company's Guangdong production facilities, Changchun production facilities and Daxing production facilities to replace existing equipment and machines, and to purchase new environmental protection and automation equipment and machines; and about 6.4% of the net proceeds from the global sale will be used for additional operating and other general funds Business use.