It is proposed to sell 225 million shares globally, with the Hong Kong public offering accounting for 10%, the international offering accounting for 90%, and an additional 15% over-allotment rights. The sale price is HK$3.3-4.3 per share, with 1,000 shares per lot. It is expected that the shares will be traded on the Stock Exchange at 9:00 a.m. on March 21, 2024 (Thursday).
According to the Zhitong Finance App, Migao Group (09879) will raise shares from March 13, 2024 to March 18, 2024. It plans to sell 225 million shares globally. The Hong Kong public offering accounts for 10%, international sales account for 90%, and an additional 15% over-allotment rights. The sale price is HK$3.3-4.3 per share, with 1,000 shares per lot. It is expected that the shares will be traded on the Stock Exchange at 9:00 a.m. on March 21, 2024 (Thursday).
According to the announcement, the company has entered into cornerstone investment agreements with Shenyang Xinchang, Xinhua Technology, Harvest and Mega Dynamic. Cornerstone investors have agreed to subscribe at the sale price or facilitate their designated entities to purchase the number of relevant shares for placement with a total subscription amount of about HK$418.5 million, subject to certain conditions. Shenyang Xinchang is a wholly-owned subsidiary of October Rice Field (09676). Xinhua Technology is the controlling shareholder of China Heart Link Chemical Fertilizer Co., Ltd. (01866).
Assuming that the over-allotment rights were not exercised and the initial offering price was HK$3.80 per share, the net proceeds from the global offering would be approximately HK$713.9 million. About 45.2% is used to invest in and build a storage and production center in Heilongjiang; about 28.2% is used to invest in and build our new production facilities in Sichuan; about 14.2% is used to fund the establishment of an R&D center; about 6.0% is used to purchase new equipment and machines; and about 6.4% is used for additional working capital and other general corporate purposes.
According to reports, the company is a domestic potash fertilizer company in China. It has procurement, processing and manufacturing capabilities, and sells various types of potash fertilizer products, including potassium chloride, potassium sulfate, potassium nitrate, and compound fertilizer. Based on the 2022 potash sales, the company ranked third among Chinese potash 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 sales revenue of potassium chloride, potassium sulfate and potassium nitrate in 2022, 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.
As of the last practical date, the company had five major production facilities in Heilongjiang, Jilin, Guizhou and Guangdong provinces in China. At the last practical date, the company had three potassium chloride granulation lines, 40 potassium sulfate production lines and three compound fertilizer production lines. The company's total estimated production capacity of potassium chloride granules, potassium sulfate and compound fertilizer is 390,000 tons, 363,000 tons, and 172,000 tons, respectively. The company also has another production facility in Sichuan Province (production facility in Chengdu), which will be relocated. Prior to discontinuation of production in January 2019, the company also produced potassium nitrate at this production facility. The company is currently planning to build a new Sichuan production facility in Mianyang City, Sichuan Province. Construction is expected to begin around the second half of 2024 and be completed and put into operation in the second half of 2025 to enable the company to resume potassium nitrate production.
On the financial side, in the 2021, 2022, and 2023 fiscal years, the company achieved operating income of 2,082 billion yuan, 3.841 billion yuan, and 4.723 billion yuan respectively; during the same period, the company's annual profit was 207 million yuan, 397 million yuan, and 422 million yuan, respectively. For the eight months ended November 30, 2023, the company had revenue of approximately $2,284 million and profit of approximately $162 million.