Highlights

• Establishedin 1967, one of the leading building contractors in Hong Kong with over 50 yearsof experience
• Principallyact as a main contractor in building construction works and RMAA works projectsacross public and private sectors in Hong Kong
• Accordingto the CIC Report, the Group ranked the third among all main contractors inHong Kong in terms of revenue from building construction works for the yearended 31 December 2018 with a market share of approximately 5.2%
• TheGroup has completed 16 building construction works projects and nine RMAA worksprojects during the Track Record Period, the aggregate original contract sum ofwhich amounted to approximately HK$8,710.9 million and HK$876.5 million,respectively
• Asat the Latest Practicable Date, the Group has nine building construction worksprojects and eight RMAA works projects which were in progress

FinancialHighlights

HONG KONG, CHINA- Media OutReach - 27 September 2019 - CR Construction Group Holdings Limited ("CR Construction", together with itssubsidiaries, the "Group"; stock code: 1582.HK), the third largest main buildingcontractor in Hong Kong in 2018[1],announces the details of its plan to list on the Main Board of The StockExchange for Hong Kong Limited ("SEHK")today.

A total of 138,850,000shares will be offered under the Share Offer, of which 124,965,000 Shares,or 90% (subject to re-allocation), will be offered by way of Placing;while the remaining 10%, or 13,885,000 Shares (subject to re-allocation), willbe offered under the Public Offer. The Offer Price per Offer Share is expected to be notless than HK$1.0 and not more than HK$1.4. The Public Offer will commence on 27September 2019 (Friday) and close at 12:00 noon on 3 October 2019 (Thursday). Theallotment result is expected to be announced on 15 October2019 (Tuesday). Dealingsin CR Construction's shares on the Main Board of the SEHK are expected tocommence on 16 October 2019 (Wednesday).

Assuming an Offer Price of HK$1.2 per OfferShare (being themidpoint of the Offer Price range), the aggregated net proceeds from the ShareOffer, after deducting underwriting fees and estimated expenses payable inconnection with the Share Offer, will be approximately HK$123.0 million. CRConstruction intendsto use these net proceeds for the following purposes: 1) approximately 87.3% willbe used for financing the upfront costs for potential new building constructionworks and RMAA works projects; 2) approximately 8.0% will be used in strengtheningmanpower; and 3) approximately 4.7% will be used in enhancing informationtechnology.

First Shanghai Capital Limited is theSole Sponsor, while First Shanghai Securities Limited, Zhongtai InternationalSecurities Limited, First Capital Securities Limited, Guotai Junan Securities(Hong Kong) Limited" and Haitong International Securities Company Limited arethe Joint Bookrunners and the Joint Lead Managers. Livermore Holdings Limited,CVP Securities Limited and Zinvest Global Limited are the Joint Lead Managers.  

Business Overview

Establishedin 1967, CR Constructionis one of the leading building contractors in Hong Kong with over 50 years ofexperience. The Group principally act as a main contractor in buildingconstruction works and RMAAworks projects across public and private sectors in Hong Kong. Accordingto the CIC Report, itranked the third among all main contractors in Hong Kong in terms ofrevenue from buildingconstruction works for the year ended 31 December 2018 with a marketshare of approximately 5.2%.

As a main contractor, theGroup is responsible for (i) overall management of the projects; (ii)formulating workprogrammes; (iii) engaging subcontractors and supervising their works;(iv) sourcing constructionmaterials; (v) communication and coordination with customers and theirconsultant teams; and (vi)safeguarding compliance with safety, environmental and other contractualrequirements.

Customers ofthe Group can be divided into two categories: (a) customers from the publicsector including various Government departments such as the Housing Authorityand the Education Bureau, educational institutions and NGOs; and (b) customersfrom the private sector such as private property developers and other listedand private companies.

For each ofthe three years ended 31 December 2018 and the three months ended 31 March2019, the Group recorded revenue of approximately HK$2,577.4 million,HK$3,141.4 million, HK$4,813.9 million and HK$1,115.0 million respectively,while profit amounted to approximately HK$45.9 million, HK$58.9 million, HK$63.4million and HK$17.1 million respectively.

The Group hascompleted 16 building construction works projects and nine RMAA works projects duringthe Track Record Period, the aggregate original contract sum of which amountedto approximately HK$8,710.9 million and HK$876.5 million, respectively. Afterthe Track Record Period and up to the Latest Practicable Date, it has completedtwo building construction works projects, with aggregate original contract sumof approximately HK$254.5 million. It had nine building construction worksprojects and eight RMAA works projects with an aggregate original contract sum ofapproximately HK$10,403.1 million and HK$1,488.6 million, respectively, whichwere in progress as at the Latest Practicable Date. As at the Latest PracticableDate, the Group has been awarded one RMAA works project with an originalcontract sum of approximately HK$3.2 million, in which it has not commencedon-site works.

Competitive Strengths

1)     Established history and a proven track record inthe building construction works and RMAA

Since it is founded in 1967, the Group has built up strong reputationand presence in the Hong Kong building construction works and RMAA worksindustries. The projects theGroup undertook as main contractor include (i) building construction worksfor the Hong Kong Housing Society, various educational institutions, privateproperty developers and other listed or private companies in Hong Kong; (ii)public housing construction for the Housing Authority; (iii) redevelopment and revitalisationprojects for the Urban Renewal Authority; and (iv) RMAA works for various Governmentdepartments including the Architectural Services Department and the EducationBureau and private property developers in Hong Kong. In 2012, it completed oneRMAA works project which was so far the largest RMAA works project in Hong Kongin terms of contract sum as at the Latest Practicable Date. The Group has alsoreceived various awards and recognitions

2)    Well positioned to secureemerging opportunities in public and private building construction

In light of the expected growth in both public and private buildingconstruction works industry in Hong Kong, the Directors of the Group considerCR Construction is well positioned to secure these new business opportunities.

In relation to public building construction projects, the Group is onthe list of approved and confirmed Group C contractor with WBDB, such that itis eligible to tender for WBDB's public building construction works contracts ofany values exceeding HK$300 million. The Group was also granted the probationarystatus as an approved building contractor for building (new works) (group NW2)by the Housing Authority.

During the Track Record Period, the Group has also been building upportfolio in building construction works and RMAA works for the private sectorin Hong Kong. The Directors of the Group believe that, the Group hasaccumulated considerable experience, knowledge and market presence in tenderingfor public and private sector projects competitively and that has obtained thenecessary registrations and permits to engage in building construction worksand RMAA works projects across public and private sectors.

3)    Long-standingand strong relationships with major business partners

The group has built up long-standing and strong relationships with majorcustomers from both public and private sectors. It has maintained over tenyears of business relationship with some of its major customers. It has alsomaintained strong relationships with consultants employed by its customers. TheDirectors of the Group believe that, the Group's track record of satisfactoryproject execution has rewarded long-term relationships with its major customersand their consultants.

The Group has also developed and maintained strong relationships withnumerous suppliers and subcontractors. Some of its major suppliers andsubcontractors have worked with the Group for over five years. The Directors ofthe Group believe that, such an extensive network and relationship withsuppliers and subcontractors allows the Group to (i) select suppliers andsubcontractors with flexibility; (ii) minimise risks of delay or shortage ofmaterials or services; and (iii) execute works on schedule.

4)    Stringentquality control and high safety standard and environmental impact control

The Group places emphasis on providing consistently high qualityservices. It has adopted and implemented a quality control system that complieswith international standards. Since 1993 and up to the Latest Practicable Date,it was assessed and certified to have complied with the requirements of ISO9001: 2015 accreditation for management system.

The Group has set up an occupational health and safety system to promotesafe working practices among all employees and to prevent the occurrence ofaccidents through safety inspections. Further, it has also set up anenvironmental management system to promote environmental awareness and toprevent pollution of the environment resulting from projects undertaken by theGroup. The Group's safety and environmental management systems have beencertified to be in compliance with OHSAS 18001: 2007 and ISO 14001: 2004standards respectively.

5)    Experiencedand committed management team and professional staff members

Led bychairman, Mr. Guan Manyu and executive Directors, the Group has an experienced seniormanagement and project management team which are committed to working closelywith customers, suppliers and subcontractors and implementing various projectsefficiently.

With theindustry insights and experiences of the Board and senior management of theGroup, it has been able to devise strategic business plans, assess and managerisks thoroughly and securing emerging opportunities.

As at theLatest Practicable Date, most of the staff members of the Group in projectdepartment and technical department have over ten years of experience inbuilding construction works industry, respectively and all of them possessrelevant professional qualifications. They are equipped with practicalknowledge and technical skills in building construction works and RMAA works.

BUSINESSSTRATEGIES

1)   Businessexpansion in building construction works and RMAA works

To sustainbusiness growth, create long-term shareholders' value and increase market sharein the building construction works and RMAA works industries, the Group intendsto tender for and secures more contracts in both public and private sectorssuch as public works with various Government departments, public housingprojects with the Housing Authority and private residential developments withprivate property developers. It aims to identify and pursue new business opportunitiesbuilding on past success and experiences in the construction industry.

Privateprojects

During theTrack Record Period and up to the Latest Practicable Date, the Group hascompleted seven residential projects, seven commercial projects and three hotelproject in Hong Kong. Based on past experience and involvement in similarprojects, the Group will actively tender for both building construction worksand RMAA works projects in the private sector. As at the Latest PracticableDate, it (i) had 13 ongoing private work projects; (ii) have been awarded oneprivate work project but have not commenced on-site works; and (iii) havesubmitted 12 tenders which were pending for results.

Public works

Given that CRConstruction is an approved and confirmed Group C contractor of WBDB for publicworks buildings, it is eligible to tender for public building constructionworks contracts of any values exceeding HK$300 million. The Group will activelytender for public building construction works and RMAA works projects based onpast experience and involvement in similar projects such as buildingconstruction works for educational institutions and NGOs and RMAA works for variousGovernment departments. As at the Latest Practicable Date, it (i) had fourongoing public work projects; and (ii) have submitted tender for 14 public workprojects which were pending for result.

Public housing

The Group wasgranted a probationary status as an approved contractor for building (newworks) (Group NW2) by the Housing Authority in the year 2000 and it canundertake not more than one Housing Authority's Group NW2 direct contract atany one time. During the Track Record Period and up to the Latest PracticableDate, the Group undertook and completed one public housing project whichinvolved building construction works of a community complex under public estateredevelopment,

The Group intendsto apply for a confirmed status in around September 2020 (the expectedcompletion date of Project C33, of which the Directors of the Group areconfident, after taking into account the size and nature of the project, wouldfulfil the conditions pertaining to the application), in order to increaseinvolvement in public housing projects.

2)    Further strengthening manpower

It is believedthat the Group's success in the construction industry is largely attributableto its experienced management and skilled staff members. In order to secure theemerging business opportunities in the construction industry and drive businessexpansion, it intends to further strengthen human resources by recruiting moreexperienced staff for projects department and technical department

The Groupdeploys building information modelling and aerial technology to simulateproject plan and assist construction sites supervision, respectively. Since an effectiveoperation of the building information modelling and aerial technology requiressufficient number of skilled staff, the Group intends to recruit additionalstaff with relevant knowledge and arrange more training courses for staff onthe usage of the technologies.

3)   Furtherenhancing information technology

In additionto the technologies the Group has employed when executing projects, it alsointends to enhance the efficiency of operations by introducing an enterpriseresource planning system and expanding and upgrading computer hardwares andsoftwares. It is  believed thatintroducing an enterprise resource planning system, which is a system ofintegrated applications to manage the business and automate various back officefunctions related to technology, services and human resources, will allow theGroup to: (i) increase efficiency of business procedures; (ii) promoteoperational control in different areas of operation; and (iii) ensureconsistency in services offered.

4)   Adheringto prudent financial management to ensure sustainable growth and capitalsufficiency

The Group generallyfund its project expenditure with cash flows from operations and bank loans as necessary.It has managed its capital and cash position prudently to ensure that  funds are properly and efficiently collectedand deployed and to maintain sufficient level of funds to settle liabilitieswhen they fall due. This allowed the group to minimise finance costs.

The Groupwill continue to monitor liquidity positions by managing key measures such asgearing ratio and cash flows. In the process of identifying and capturingemerging business opportunities, it will continue to cooperate with externalparties to develop projects on a selective basis to take advantage ofcooperating partners' resources. It will remain disciplined in capital commitmentsand seek long-term financing opportunities.

About CR Construction Group Holdings Limited

CRConstruction Group Holdings Limited, established in 1967, is one of the leadingbuilding contractors in Hong Kong with over 50 years of experience. The Groupprincipally acts as a main contractor in building construction works and RMAAworks projects across public and private sectors in Hong Kong. According to theCIC Report, it ranked the third among all main contractors in Hong Kong interms of revenue from building construction works for the year ended 31December 2018 with a market share of approximately 5.2%.