Highlights

• A full-service restaurant group in Hong Kongoffering Cantonese dining service and banquet service
• Providingone-stop wedding banquet service
• Rankedthird amongst the Chinese full-servicerestaurant groups in the Hong Kong banquet market in 2017, with amarket share of approximately 5.0%*[1]
• Currently operates 20 Chinese restaurants under two brandnames, namely "Palace (煌府)" and "Royal Courtyard (煌苑)"
• For the years ended 31 March 2016, 2017 and2018, revenue was approximately HK$596.0 million, HK$635.1 million and HK$770.1million, respectively, whilst net profit was approximately HK$39.9 million, HK$40.3 million and HK$53.0million

Financial Highlights

HONG KONG, CHINA - Media OutReach - 30 January 2019 - Palace Banquet Holdings Limited ("PalaceBanquet", together with its subsidiaries, the "Group"; stock code: 1703),a full-servicerestaurant group in Hong Kong offering Cantonese dining service and banquet service, announces the details of itsplan to list on the Main Board of The Stock Exchange for Hong Kong Limited ("SEHK") today.

A total of 300,000,000shares will be offered under the ShareOffer, of which 270,000,000Shares or 90% (comprising 220,000,000 new Shares and 50,000,000 Sale Shares, subject to re-allocation and the Over-allotment Option), will be offered byway of Placing; while the remaining 10%, or 30,000,000 Shares (subject to re-allocation) will be offered under the Public Offer. The Offer Price per Offer Share is expected to be not less than HK$0.50 andnot more than HK$0.75. The Public Offer will commence on 31 January2019 (Thursday)and close at 12:00 noon on8 February 2019 (Friday).The allotment result is expected to be announced on 14 February2019 (Thursday). Dealings in PalaceBanquet'sshares on the Main Board of the SEHK are expected to commence on 15 February2019 (Friday).

Assuming an Offer Price of HK$0.625 per Offer Share (being the midpointof the Offer Price range), the aggregated net proceeds from the Share Offer,after deducting related expenses, will be approximately HK$122.1 million. Palace Banquet intends to use these net proceeds for the followingpurposes: 1) approximately 76.1%for expanding itsrestaurant network and geographic coverage by opening 8 new restaurants in Hong Kong by the yearending 31 March 2021; 2) approximately 14.1% for renovation of its existing restaurants; 3) approximately 5.0% for promoting its brands and wedding banquet service; and 4)approximately 4.8%for additional working capital, strategic investment and other general corporate purposes.

ShenwanHongyuan Capital (H.K.) Limited is the Sole Sponsor. Shenwan Hongyuan Capital(H.K.) Limited and Opus Capital Limited are the Joint Global Coordinators. ShenwanHongyuan Capital (H.K.) Limited, Opus Capital Limited and Haitong InternationalSecurities Company Limited are the Joint Bookrunners and Joint Lead Managers.Elstone Securities Limited and Great Roc Capital Securities Limited are theCo-Lead Managers.

Industry Overview

According to the Frost & Sullivan Report, the banquet market in Hong Kong hasgradually recovered as the year of 2017 has double spring and leap month, whichtraditional Chinese people consider good fortune. The market is estimated toachieve a total revenue of HK$8.7 billion by 2022, representing a CAGR ofapproximately 2.1% from 2017 to 2022. TheGroup ranked third amongst the Chinese full-service restaurant groups in the HongKong banquet market in 2017 in terms of revenue, with a market share ofapproximately 5.0%.

Wedding banquet accounts for the largest proportion in the totalbanquet market. The market is forecasted to be relatively stable in the comingfew years, with higher average spending on wedding banquets. The per capitaaverage spending on wedding banquets is expected to reach approximately HK$175,000in 2022, representing an increase of about 8.7% from HK$161,000 thousand in2017.

BusinessOverview

The Group is a full-service restaurantgroup in Hong Kong offering Cantonese dining service and banquet service, includingwedding banquet service. Currently, the Group operates 20 Chinese full-servicerestaurants under two brand names, namely brands with the word "Palace (煌府)" and "RoyalCourtyard (煌苑)".All of its restaurants are strategically located at shopping mall, commercialcomplex or on-street shops at prime locations with convenient access to publictransport, in particular railway station. The Group offers services includingwedding invitation card design, wedding cake and transportation pick-up,subject to the wedding banquet packages selected. Its restaurants are speciallydesigned for hosting banquets and events, with enhanced interior features suchas 100-feet passage from the wedding stage to the middle of the banquet hall,revolving stage, passenger-carrying-gondola, chapel mock-ups and lightingeffect.

During the Track Record Period, itsrevenue was mainly generated from: (1) banquet service for events, includingweddings, birthday parties, graduation dinners, babies' hundred dayscelebration, corporate annual dinners and other celebration dinners; and (2) diningservice offering Cantonese cuisine. According to the Frost & SullivanReport, the Group ranked third amongst the Chinese full-service restaurants inthe Hong Kong banquet market with a market share of approximately 5.0%, andranked seventh among the top 10 market players in the Hong Kong full-servicedining market with a market share of approximately 1.7%, in terms of revenue in2017.

Competitive Strengths

1)    Providing one-stopwedding banquet service

The Group provides wedding banquet customers withone-stop wedding banquet services for their wedding planning and preparationprocess solutions. Its restaurants are specially designed for hosting banquetswith unique theme and enhanced interior features. A wedding planning manager willbe assigned to provide service of wedding planning and assist the executionprocess to its wedding banquet customers. The Group will constantly keep abreast of currenttrends in wedding banquet styles to serve and attract customers requiringone-stop wedding banquet service.

2)    Diversifiedservices and menu offerings

The Group has the capability to provide diversifieddining services to its customers, including Cantonese cuisine and other banquetservice for events such as birthday parties, graduation dinners, babies'hundred days celebration, corporate annual dinners and other celebration dinners.The Group can thus maintain its seat turnover rate in low season for weddingbanquet and its restaurants can be accustomed to residential districts, whichhave greater demand for dining service. The Group may customise the set menusat its customers' special request and is able to attract different customersranging from families, couples and companies.

3)    Strategic locationof its restaurants

Before opening a new restaurant, the Group willconsider a number of factors, which include, amongst others, visibility andaccessibility to customers, flow and level of pedestrian traffic and distanceto public transport. All of its existing restaurants are located at walkabledistance to railway stations. The Group strategically opened restaurants indifferent districts of Hong Kong to cover a broad customer base and expandmarket penetration.

4)    Experienced andstable management team

The Group has a strong and experienced managementteam with extensive experience in catering industry and restaurant management.Mr. Chan Shou Ming, the Group's executive Director and the chairman of theBoard has close to 30 years of experience in the catering industry andspecialised in providing banquet services. Ms. Chen Xiao Ping, the Group'schief executive officer and executive Director, who is responsible for buildingand managing the brand image and overseeing the overall operations of theGroup, has over 20 years of experience in the catering industry.

BUSINESS STRATEGIES

1)    Expanding itsrestaurant network and geographic coverage

The Group intends to further expand its currentrestaurant network by opening 4new restaurants by 31 March 2020 and another 4 newrestaurants by 31 March 2021, so as to increase the Group's market share andoptimise geographic coverage. It is believed that the expansion plan will: (i)expand the Group's restaurant network into new geographical locations and thusincrease its market shares and geographic coverage; (ii) broaden its customerbase by accustoming its new restaurants to residential districts and newlocations; (iii) increase its sales and brand recognition; and (iv) enhancecost efficiency by strengthening bargaining power with suppliers and landlords.

2)    Renovating itsexisting restaurants to maintain competitiveness

According to the Frost & Sullivan Report,wedding venue is one of the factors that new couples would mostly consider beforeholding their weddings. Venues that are newly decorated or refurnished withbetter environment and design are popular amongst new couples. The Group plansto carry out renovations in 8 of its existing restaurants by the year ending 31March 2020, to maintain its competitiveness, attract more customer traffic andhence increase its revenue.

3)    Promoting itsbrands and wedding banquet service

The Group plans to further promote its brands toattract guest traffic and increase/maintain its market share. The Group's keymarketing strategies include: attending wedding exhibitions, traditionaladvertisements and promotional activities, social media, sponsorships,spokesperson as well as membership programme.

About the Group

Palace Banquet Holdings Limited isa full-service restaurant group in Hong Kong offering Cantonese dining serviceand banquet service, includingone-stop wedding banquet service. Currently, the Group operates 20 Chineserestaurants under two brand names, namely "Palace (煌府)" and "Royal Courtyard (煌苑)". According to the Frost & SullivanReport, the Group ranked the third amongst the Chinese full-service restaurantgroups in the Hong Kong banquet market with a market share of approximately5.0%. For the years ended 31 March 2016, 2017 and 2018, its revenue wasapproximately HK$596.0 million, HK$635.1 million and HK$770.1 million,respectively, whilst its net profit was approximately HK$39.9 million, HK$40.3million and HK$53.0 million in the same period.