Tsit Wing International Holdings Limited to raise a maximum of approximately HK$524 million by way of Share Offer

Highlights

• A leading integrated B2B coffee and black tea solutions provider in Hong Kong, Macau and the PRC with 85-year experience, which covers the entire coffee and tea procurement, processing and distribution value chain
• A multi-channel distribution network that can reach approximately 60% of the food outlets in Hong Kong, which includes approximately up to 77.6%, 70.3% and 78.7% market coverage of fast food stores, Cha Chaan Tengs and cafes respectively, in 2016
• Developed a stable and diverse group of customers that include franchised business of McDonald's in the PRC and Hong Kong , Yoshinoya, 7-Eleven , Cafe´ de Coral , Fairwood , Tsui Wah, Tai Hing and Spaghetti House
• Largest B2B coffee and black tea solutions provider in Hong Kong in 2016 with 24.5% of the market share in terms of B2B revenue, according to Frost & Sullivan report
• Business scope broadened to provide food supplies and frozen meat business commenced in Hong Kong and the PRC in 2013
• Entered into a strategic cooperation agreement in July 2017 with a leading food provider, NH Foods, to jointly develop the food products market in Hong Kong, Macau and the PRC
• Entered into a memorandum of understanding with F&N in April 2018 to explore business and product development opportunities for the supply, distribution, cobranded promotion and co-development of beverage products and/or beverage solutions

* Eliminated the effect of: (i) listing expenses; (ii) consultancy fee incurred for change in the nature of land use rights and formation of development plan of a piece of land in Dongguan; (iii) legal fee incurred for settled trademark litigation; (iv) impairment loss and write-down of inventories in  phasing out the current model of milk tea machines; (v) write-down in value of coffee pod machines inventories; (vi) impairment of trade receivables and write-down of inventories from discontinued prune business in the PRC; (vii) dividend income from an available-for-sale investment; (viii) interest income earned from the ultimate holding company; (ix) compensation from settled litigation; (x) compensation received from a supplier and excluding any tax effect related to the preceding judgements.

HONG KONG, CHINA - Media OutReach - 27 April 2018 - Tsit Wing International Holdings Limited ("Tsit Wing", together with its subsidiaries, the "Group"; stock code: 2119), an integrated B2B coffee and black tea solutions provider, announces the details of its plan to list on the Main Board of The Stock Exchange for Hong Kong Limited("SEHK") today.

A total of 239,200,000 shares will be offered under the Global Offering, of which 215,280,000 Shares, or 90%, subject to adjustment and the Over-allotment Option, will be offered by way of International Placing while the remaining 10%, or 23,920,000 Shares, subject to adjustment, will be offered under the Hong Kong Public Offering (including Employee Preferential Offering). The Offer Price per Offer Share is expected to be not less than HK$1.50 and not more than HK$2.19. The Public Offer will commence on 30 April 2018 (Monday) and close at 12:00 noon on 4 May 2018 (Friday). The allotment result is expected to be announced on 10 May 2018 (Thursday). Dealings in Tsit Wing's shares on the Main Board of the SEHK are expected to commence at 9:00 a.m. on 11 May 2018 (Friday).

The company has entered into cornerstone investment agreements with NH Foods Limited and Fraser and Neave, Limited ("F&N"). NH Foods Limited, a Japanese corporation listed on the Tokyo Stock Exchange, has agreed to subscribe for one billion Japanese Yen equivalent of shares at the Offer Price, representing approximately 16.56% of the Offer Shares before exercise of over-allotment option assuming the mid-point of the Offer Price. F&N which is listed on the Singapore Stock Exchange has agreed to subscribe for 32,000,000 shares at the Offer Price, representing approximately 13.38% of the total offer shares before exercise of over-allotment option.Based on the mid-point of the Offer Price, the total number of shares to be subscribed by the Cornerstone Investors will represent approximately 29.94% of Offer Shares before exercise of over-allotment option.

Assuming an Offer Price of HK$1.84 per 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$149.7 million. Tsit Wing intends to use these net proceeds for the following purposes: 1) approximately 40% for strengthening the ability to provide food and beverage products solutions, in particular, potential future business or share acquisitions, joint ventures or other strategic arrangements to expand and enhance its product portfolio and to deepen its market penetration; 2) approximately 20% for capital investments in relation to acquiring, expanding, streamlining or upgrading its manufacturing plants, premises, facilities, equipment or capabilities, with the aim to enhance its production efficiency or reduce its operating costs, or expand its product portfolio; 3) approximately 10% for expanding its food and beverage business in Southeast Asia (including the costs of setting-up representative offices andcommercially-viable strategic acquisition); 4) approximately 10% for pursuing product development and research, whether in-house or through collaboration with external parties, and enhancing its technological capabilities; 5) approximately 10% for bolstering its sales, marketing and advertising efforts to enhance brand recognition and fortify brand loyalty for its products and businesses; and 6) approximately 10% for working capital and other general corporate purposes.

BOCI Asia Limited is the Sole Global Coordinator. BOCI Asia Limited and BOSC International Company Limited are the Joint Sponsors. BOCI Asia Limited and DBS Asia Capital Limited are the Joint Bookrunners and/or Joint Lead Managers.

Business Overview

The Group is a leading integrated B2B coffee and black tea solutions provider in Hong Kong, Macau and the PRC. The Group is a well-trusted brand that provides one-stop coffee and tea solutions services to commercial customers that cover the entire coffee and tea procurement, processing and distribution value chain, with an expertise on Hong Kong-style milk tea. The Group has developed a stable and diverse group of customers includes franchised business of McDonald's in the PRC and Hong Kong, Yoshinoya, 7-Eleven, Cafe´ de Coral, Fairwood, Tsui Wah, Tai Hing and Spaghetti House. The diversified customer base gives us a multi-channel distribution network that can reach approximately 60% of the food outlets in Hong Kong in 2016, which include approximately up to 77.6%, 70.3% and 78.7% market coverage of fast food stores, Cha Chaan Tengs and cafes respectively. In 2017, coffee sold by the Group can be made into 253.3 million to 337.7 million cups of coffee per year and between 693,800 to 925,100 cups of coffee per day (assuming nine to 12 grams of coffee is applied to produce each cup), while tea sold by us can be made into 302.4 million to 403.2 million cups of milk tea per year and 828,500 to 1,104,600 cups of milk tea per day (assuming nine to 12 grams of tea is applied to produce each cup of milk tea).

The Group broadened its business scope to provide food supplies and commenced its frozen meat business in Hong Kong and the PRC in 2013, and its frozen processed food business in Hong Kong in 2015. In July 2017, the Group entered into a strategic cooperation agreement with a leading food provider, NH Foods, which has operations in about 90 locations in 19 countries and regions to jointly develop the food products market in Hong Kong, Macau and the PRC. The management believes that Tsit Wing's market knowledge and well-established customer base combined with NH Foods's expertise in food products, experience and resource strengthens its product portfolio and positions the Group well to develop targeted markets in Hong Kong, Macau and the PRC. The Group entered into a memorandum of understanding with F&N in April 2018 to explore business and product development opportunities for the supply, distribution, cobranded promotion and co-development of beverage products and/or beverage solutions.

Revenue derived from the Group's beverage solutions increased from HK$639.2 million for the year ended December 31, 2016to HK$711.3 million for the year ended December 31, 2017. It was primarily contributed by a growth in the volume ofits coffee, tea and milk products, and the increase in the average selling price of its coffee and tea products. Revenue derived from food products increased from HK$210.5 million for the year ended December 31, 2016 to HK$243.3 million for the year ended December 31, 2017. Changes mainly reflect variations to the sales volume of the products and the growth in sales to existing customers.

Competitive Strengths

1)    A leading and trusted integrated B2B coffee and black tea solutions provider in Hong Kong, Macau and the PRC with 85 years of heritage

Leveraging off its wealth of market knowledge and product know-how, the Group provides its customers a one-stop service starting from market analysis and recipe development through sourcing, production, marketing and after sales services. The Group has developed a stable and diverse group of customers that include franchised business of McDonald's in the PRC and Hong Kong, Yoshinoya, 7-Eleven, Cafe´ de Coral, Fairwood, Tsui Wah, Tai Hing and Spaghetti House. The Group has also been awarded the Hong Kong top brand mark since 2009 and served as the official coffee and tea provider at 2008 Beijing Olympics, 2010 Guangzhou Asia Games and 2011 Shenzhen Summer Universiade Games. According to the survey conducted by Frost & Sullivan, Tsit Wing is the most well-recognized top quality coffee and black tea brand among restaurants in Hong Kong.

2)    Strong beverage customizing capability and an established food products business supported by a worldwide sourcing network

As a trusted partner, the Group actively approaches its customers to form solutions that transfer their beverage concepts into customized products that suit the tastes of targeted consumers economically. The Group remains committed to ensuring that solutions it forms with customers have the desired results through a comprehensive after sales service. Tsit Wing regularly engages its customers to discuss the latest market preferences and best practices that it assembles through its diverse sales and distribution venues, and to collect their feedback on the existing products and their new beverage concepts. In addition, Tsit Wing believes its well-established connections to renowned suppliers have contributed to its success as an integrated coffee and tea solutions provider.

3)    Stable and diversified customer base supported by a well-established multi-channel distribution network with proven ability to capture new markets

Supported by a pre-delivery system, a well-established logistics team, and supplemented by distributors with local market knowledge, the Group have been able to maintain a delivery service of within 24 hours to approximately 750 delivery points in Hong Kong on a daily basis. Leveraging off its established distribution network for beverage products, the Group has expanded its frozen processed food offering to well-established fast food chains and Cha Chaan Teng to which it previously only provided beverage products.　　　

4)    Strong track record that is enhanced by integration of advanced quality control and data analysis system that also facilitates business development

The Group's stringent quality control process starts with sourcing from suppliers with internationally-accredited quality certifications, which is supplemented with scientific tests and online monitoring to further ensure product quality.Also, the Group has adopted an integrated business intelligence system that connects different segments of its operation. Through such system, the Group can efficiently coordinate its production planning, supply chain management, business analysis management and financial reporting management. This ensures the Group to make appropriate operational adjustments in response to market conditions and customer needs and forecast future demands more accurately. The Group has amassed a comprehensive database of food and beverage outlets in Hong Kong which is officially updated annually.

The Group's stringent quality control process starts with sourcing from suppliers with internationally-accredited quality certifications, and journeys through its operations in Hong Kong and the PRC under the strict commitment to internationally recognized standards, including HACCP, ISO 9001 : 2008, ISO 14001 : 2004 and ISO 22000: 2005.

5)    Experienced and high caliber management team with valuable know-how supported by full adoption of modern management system

The chairman and Executive Director, Mr. Peter T.T. Wong, has over 38 years of management and industrial experience in the food and beverage industry. Mr. Wong is the architect behind Tsit Wing's production modernization that included installation of automated equipment, and capacity expansion that was instrumental to its business growth. The Group's experienced senior management team comprises of industry experts with valuable know-how and more than ten years of experience in the food and beverage industry on average. They have developed extensive experience in raw material procurement, product development and distribution management, which has all contributed to better operations and cost management.

BUSINESS STRATEGIES

1)    Further strengthen its leading position in the integrated B2B coffee and black tea solutions market in Hong Kong, deepen its penetration in the PRC, expand its business in Southeast

Asia, and enhance its brand recognition and awareness

Tsit Wing believes that a commitment to improve its solution offering capabilities is crucial to maintaining its leading market position. It will continue to leverage off its global sourcing capability and further invest in its market-oriented product development efforts. At the same time, leveraging off the wealth of industry knowledge that it has accumulated and continue to garner in its day-to-day operations, the Group remains committed to building a know-how data base that will help formulate integrated coffee and tea solutions even more efficiently, and in turn improves the quality of its service in the future. The Group also plans to expand its sales channels through increased coverage of supermarkets, luxury hotels, fast food chains and airlines. It intends to further enhance the brand recognition and awareness by devoting more resources in promotional and marketing activities.

The Group also seeks to deepen its market penetration and enhance its brand recognition and awareness in the PRC. It intends to expand its sales channels that are believed to have relatively higher growth potential, particularly the Pearl River Delta in the near term and the Yangtze River Delta in the long-run. During the Track Record Period, its sales efforts mainly focused in the first and second tier cities in eastern and southern China, further grow its sales and distribution network into other major cities with strong growth potential and seek cross-selling opportunities of its other products.

2)    Continue to strengthen its frozen meat and frozen processed food products business and expand its product offerings

The Group intends to actively expand its product offerings to provide the convenience of one-stop purchasing for its customers and expand its sales channel to food and beverage providers. The Group also aims to further expand its business in the frozen processed food markets, enhances its ability to procure customized frozen processed food and integrates its frozen meat and frozen processed food products into customer's central kitchen. The Group entered into a strategic cooperation agreement with NH Foods, a leading food provider with operations in about 90 locations in 19 countries and regions, in July 2017 to jointly develop the food products market in Hong Kong, Macau and the PRC. Also, the Group entered into a memorandum of understanding with F&N in April 2018 to explore business and product development opportunities for the supply, distribution, cobranded promotion and co-development of beverage products and/or beverage solutions.

3)    Continue to strengthen its sourcing capability and strengthen its vendor selection process

The Group seeks to continue to strengthen both the breadth and the depth of its worldwide sourcing network by engaging more globally recognized suppliers while deepening its relationship with existing supply channels. It strives to identify more materials that could be applied to its customized solutions and allow the Group to offer a comprehensive portfolio of products. Tsit Wing will also continue to monitor market trend and seek raw materials that can be applied to form food and beverage flavors that best meet latest consumer preferences. The Group also strives to continue to build a healthy pool of suppliers that can ensure stable and quality supply at competitive price. It intends to strengthen its vendor selection process to ensure only qualified new suppliers are engaged and existing suppliers are evaluated regularly.

4)    Upgrade its production facilities and further enhance its production capabilities.

The Group intends to (i) acquire new coffee machines for our customers, (ii) upgrade the coffee roasters in our Hong Kong facility, (iii) set up a warehouse and renovate facilities, and (iv) acquire additional machinery including equipment used to detect foreign objects, equipment for better working environment for our employees and packaging equipment with functions equipped to cater to small-size packaging for tea (which is not interchangeable for coffee) to increase the products portfolio of the Company. Meanwhile, the Group will continue to advance its quality control equipment and warehouse capabilities to support the expansion of production.

About Tsit Wing International Holdings Limited

Tsit Wing isa leading integrated B2B coffee and black tea solutions provider in Hong Kong, Macau and the PRC with85-year heritage. In 2017, coffee sold by the Group can be made into most 337.7 million cups of coffee per year; tea sold can be made into most 403.2 million cups of milk tea per year. Tsit Wing commenced its frozen meat business in Hong Kong and the PRC from 2013.

According to the Frost & Sullivan Report, Tsit Wing is the largest B2B coffee and black tea solutions provider in Hong Kong in 2016 with 24.5% of the market share in terms of B2B revenue.