«This is an initial public offering of up to 7,500,000 new shares of Greater China Precision Components Limited, Singapore, (the „„Company‟‟). ...»
Offering of up to 7,500,000 ordinary shares
(subject to an over-allotment option of up to 750,000 ordinary shares)
This is an initial public offering of up to 7,500,000 new shares of Greater China Precision Components Limited, Singapore, (the „„Company‟‟). The Company will receive the net proceeds from the sale of the new
In addition, VEM Aktienbank AG may effect over-allotments as part of the offering of up to 750,000 additional
shares. These shares have been granted to VEM Aktienbank AG by Mr Wu Baofa, Mr Ma Zhaoyang and Mr Ang Kheng Hui (the „„Existing Shareholders‟‟) by means of a securities loan for a potential overallotment.
To repay the securities loan, the Existing Shareholders have granted VEM Aktienbank AG an option exercisable within 30 calendar days after the commencement of trading to purchase up to an additional 375,000 existing shares at the offer price. The remaining up to 50% portion of the overallotment shall be issued by the Company in the course of a further capital increase at the option of VEM Aktienbank AG.
The offering consists of a public offering in Germany and in the United Kingdom and private placements to institutional investors outside the United States. The shares have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the „„Securities Act‟‟), and are only being offered and sold outside the United States in reliance on Regulation S under the Securities Act.
For a description of restrictions on offers, sales and transfers of the shares and the distribution of this prospectus in other jurisdictions, see Selling and Transfer Restrictions.
Prior to the offering, there has been no public market for the shares. VEM Aktienbank AG intends to apply for admission of all of the Company‘s shares, i.e. up to 27,500,000 shares (including up to 7,500,000 new shares, however without regard to new shares potentially issued on account of options relating to the overallotment option) to trading on the Open Market in the Entry Standard segment of the Frankfurt Stock Exchange under the symbol 49G.
See „„Risk Factors‟‟ for factors that should be considered before purchasing shares.
This document constitutes a prospectus for the purposes of the public offering in Germany and the United Kingdom. This Prospectus has been prepared in the English language with a German language summary in accordance with Commission Regulation (EC) No 809/2004 of 29 April 2004 and conforms to the requirements of the German Securities Prospectus Act (Wertpapierprospektgesetz). This Prospectus has been approved by the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht — „„BaFin‟‟) after a review for completeness of the Prospectus, including a review for coherence and comprehensibility of the presented information, according to Section 13, paragraph 1 of the German Securities Prospectus Act.
The following summary is intended as an introduction to this Prospectus and should be read in conjunction with the more detailed information contained elsewhere in this Prospectus. Investors should base their decision on whether to invest in the shares on an examination of the entire Prospectus.
GREATER CHINA PRECISION COMPONENTS LIMITED with its registered office located at 7 Temasek Boulevard #13-02 Suntec Tower One, Singapore 038987 (the ‗‗Company‘‘ and collectively with its direct and indirect subsidiaries ‗‗Green Group‘‘, ―Group‖ or ―Green‖) assumes responsibility for the contents of this summary pursuant to Section 5, para. 2, sentence 3, no. 4 of the German Securities Prospectus Act (Wertpapierprospektgesetz). However, the Company can be held liable for the content of the summary only in the event that the summary is misleading, false or contradictory when read in conjunction with other parts of this Prospectus.
If a claim is brought by an investor before a court on the basis of information contained in this Prospectus, the investor appearing as plaintiff may, pursuant to the national legislation of the Member States of the European Economic Area, be required to bear the cost of having this Prospectus translated prior to the commencement of legal proceedings.
1.1 GENERAL INFORMATION ON THE COMPANY AND ITS BUSINESS
1.1.1 Overview Please note that the Company did not commence any business activities since incorporation. Since the business of the Green Group essentially corresponds to the business activities of its wholly owned indirect subsidiary Huizhou Green Plastic Electronic Co., Ltd, the following description of the business activities refers to the business activities of Huizhou Green Plastic Electronic Co., Ltd.
The Green Group is one of the leading one-stop provider of mobile handset casings in China. Its primary business is the manufacturing of spray painted mobile handset casings. As a one-stop service provider, the Green Group provides its customers with ancillary services, such as product design development, molding and prototyping, raw materials and components procurement, plastic injection, spray painting and assembling services. Substantially all of its products are sold to customers that are based in China, including electronics manufacturing service providers, or EMS for international brands of mobile handset original equipment manufacturers (OEMs). The Green Group does not manufacture products under its own brand. The Green Group operates its business primarily through its subsidiary, Huizhou Green Plastic Electronic Co., Ltd in Huizhou City, Guangdong Province, China. The Green Group currently has production facilities at two leased locations in Guangdong Province, China.
In the past, the Green Group outsourced parts of its injection molding processes to a related party and to certain third party electronics manufacturing service providers. Since the end of 2005, the Green Group had ceased to outsource such processes after acquiring new machines and equipment on order to expand the production capacities. The Green Group does not intend to outsource the manufacturing of a substantial portion of its products to EMS.
Since commencing operations in 2002, the Green Group has significantly expanded its customer base to include leading international brand OEMs. The Green Group develops and produces a wide range of mobile handset casings with an increasing focus on adding value to its customers‘ needs by offering services such as design development and prototyping and assembly services. The in-house research and development team of the Green Group has devised a number of molding techniques and developed certain processes and tools used for the manufacturing and spray painting of handset casings.
Currently, the Green Group is constructing a new production base with a built-up area of 66,000 square meters on a land area of approximately 56,609 square meters in Block 23, Sandong Digital Industrial Park, Sandong Town, Huizhou City, Guangdong Province in order to consolidate its production facilities. The new production base will house all of the existing production facilities, including new additions of machines and equipment. The new production base will house 51 molding related machines (include 10 CNCs, 13 EDMs, 7 Wire Cut machines and 1 CMM), 80 injection machines, 6 spray painting lines and 12 semi automated assembling lines and will boost the Green Group‘s handset casing production capacity significantly. The new base will also be equipped with production processes to manufacture external screens, handset keypads and other components; this will allow the Green Group to extend its product offering and put Green Group on track to becoming a vertically integrated handset module producer. The Green Group believes that its current operational model makes Green Group a cost-effective and high-quality handset casing and component manufacturer. The Green Group expects to commence operations at the new base in the last quarter of 2008.
The Green Group sold approximately 14.6, 25.9, 54.2 and 31.8 million pieces of handset casing components in 2004, 2005, 2006 and the first six months of 2007 respectively. Its revenue increased from RMB 87.0 million in 2004 to RMB 100.3 million in 2005 and to RMB 168.4 million in 2006. The net profit increased 1,578.57 % during the period under review, from RMB 1.4 million in 2004 to RMB 23.5 million in 2006. The Green Group recorded a revenue of RMB 110.6 million and net profit of RMB 29.8 million for the first six months of 2007.
1.1.2 Strengths The Green Group believes that the handset casing and component manufacturing and assembly industry has significant growth opportunities. It also believes that it has the following principal competitive strengths that
provide the Green Group with opportunities to grow its business:
The Green Group has a one-stop production process for its handset casings The Green Group provides its customers with a wide range of services such as product design and development, molding and prototyping, raw materials and components procurement, plastic injection, spray painting and assembling services. The Green Group believes that it is well equipped in order to provide a full range of services to its customers and to respond quickly and efficiently to the needs of its customers.
The Green Group has achieved a high standard in our spray painting process Capitalising on its strong technical know-how and backed by the latest technologies and equipment, the Green Group has gained wide accolade from our customers on the standards of our painting capabilities. The Green Group has constantly overcome painting complexities to achieved desired paint works for our customers and that has made it a very reliable and competent supplier to existing customers, and new customers alike.
The Green Group is capable of performing product design and development, precision tooling and mold making in-house The Green Group has a complete range of tooling and molding equipment and technologies. This enables significant cost savings and a shorter turnaround time for the customers.
The Green Group is capable of offering a broad range of other auxiliary components for mobile handsets Leveraging on its experience and expertise in the manufacturing of precision components, the Green Group is capable of developing other auxiliary components of mobile handsets. Currently, the Green Group already receives enquiries from its customer about such opportunities of providing more services. The Green Group is able to add value to its customers, to generate a multiplier effect on its revenue without additional capital investments and to achieve further savings by optimizing the use of its production base for a higher degree of cost-effectiveness.
The Green Group has strong research and development capabilities in various aspects of the production process The Green Group is highly committed to strengthen its research and development capabilities. It has a qualified team of more than 49 technicians and engineers in its research and development department and believes that its strength in its research and development capabilities is reflected in the
following key areas:
(i) Production and processing techniques and technologies. The Green Group has refined a number of production and processing techniques and technologies in the manufacturing process of molding, plastic injection of handset casing and spray painting. Its know how in these areas enables the Green Group to shorten production time, improve product quality and develop innovative ideas for the development of handset designs.
(ii) Molding and tooling. The in-house molding department of the Green Group provides the customers with a faster turnaround time required for pre-production and prototyping. The Green Group has refined and introduced techniques gained from its research and development efforts in order to offer better flexibility to the customers and to reduce production lead time, improve the lifespan of molds and maintain product quality.
(iii) Equipment and production lines. The research and development capabilities of the Green Group are also demonstrated through its abilities to design specific features for the equipment and production lines that are used in the production process. This leads to a reduction of capital expenditures. The Green Group is also able to better calibrate and modify its equipment in order to cater to the specific needs and design of each production, thereby enhancing the efficiency in the production process.
Currently, the Green Group has six pending patent applications and 12 know-how that the Green Group intends to keep as in-house trade secrets. The Green Group believes that its efforts and success in the research and development of advanced technologies and products provide the Green Group a strong platform to strengthen its market position in the handset casings and components manufacturing and assembly industry, to allow the green Group to offer quality products in a cost-effective and timely manner to existing customers and to attract new customers.
The Green Group is an established high-quality manufacturer with an efficient cost structure The Green Group‘s largest customers are suppliers of handset modules to leading international brand name handset OEM‘s. The Green Group believes that it has one of the most competitive cost structures in the industry. The Green Group is able to realize the benefits of costs savings from economies of scale arising from the efficient use of its production facilities and of achieving improved bargaining power over raw material suppliers. The Green Group believes that its cost competitiveness is a crucial factor in securing business from its customers. The customers put the products through a stringent measurements of quality assurance programs such as lifespan and overall quality tests under varying inspection conditions. The Green Group believes that the skills and technologies associated with the production of such high-quality products are not easily duplicated by smaller and less established competitors. It also believes that being an approved supplier to these customers demonstrates the overall quality of its products and the effectiveness of its development quality management procedures and quality assurance programs throughout the design and production process.