BCI Group Holdings Limited To Raise a Maximum of Approximately HK$70 Million from Share Offer

HONG KONG--()--Highlights

  • A food and beverage and entertainment group based in Hong Kong that owns and operates two night entertainment clubs, namely Volar and Fly; and three restaurants focusing on Japanese-style curry dishes under the proprietary “Tiger” brand.
  • Leading position with strong brand recognition.
  • For the year ended 31 May 2016, total revenue of BCI increased by 31.9% yoy to HK$88.9 million; Profit and total comprehensive income increased by HK$18.1% yoy to HK$8.4 million.
  • According to the Frost & Sullivan Report (“F&S Report”), BCI was one of the leading market players in the clubbing market in Hong Kong in terms of revenue for the year ended 31 May 2016 with a market share of approximately 10.6%.
  • Revenue from clubbing operations for the year ended 31 May 2016 increased by 17.3% yoy to HK$72.9 million.
  • BCI's three “Tiger” branded restaurants are aimed at mass market customers, providing Japanese-style curry dishes. All of its restaurants are strategically located in prime areas.
  • Revenue from restaurant operations for the year ended 31 May 2016 was HK$16.0 million, which accounts for 18.0% of total revenue.

Financial Highlights

   

Year ended
31 May

Four months
ended 30 Sep

HK$’000 2015   2016 2016
Revenue 67,387 88,870 30,613
Clubbing Operations 62,082 72,851 24,240
Restaurant Operations 5,305 16,019 6,373
Profit/ (loss) before income tax expense 8,569 10,407 (6,414)
Profit/ (loss) and total comprehensive income/ (expense) for the year/ period 7,099 8,384 (6,775)
Net profit/ (loss) margin (%) 10.5% 9.4% (22.1)%

BCI Group Holdings Limited (“BCI”, together with its subsidiaries, the “Group”; stock code: 8412), a food and beverage and entertainment group based in Hong Kong, announces the details of its plan to list on the Growth Enterprises Market of The Stock Exchange of Hong Kong Limited (“SEHK”) today.

A total of 200,000,000 shares will be offered under the Share Offer, of which 180,000,000 Shares, or 90%, subject to re-allocation, will be offered by way of Placing while the remaining 10%, or 20,000,000 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$0.25 and not more than HK$0.35. The Public Offer will commence on 24 March 2017 (Friday) and close at 12:00 noon on 29 March 2017 (Wednesday). The allotment result is expected to be announced on 6 April 2017 (Thursday). Dealings in BCI’s shares on the Growth Enterprises Market of the SEHK are expected to commence on 7 April 2017 (Friday).

Assuming an Offer Price of HK$0.30 per Share (being the mid-point of the indicative Offer Price range), the aggregated net proceeds from the Share Offer, after deducting the underwriting commission and related expenses, will be approximately HK$38.8 million. BCI intends to apply the net proceeds as follows: 1) approximately 44.3% to be used for establishing two sports-themed bars; 2) approximately 15.5% to be used for establishing two standalone restaurants and two food court restaurants; 3) approximately 26.5% to be used for covering the decoration, furniture and fixture expenses for Volar; 4) approximately 10.3% for covering the decoration, furniture and fixture expenses for Fly; and 5) approximately 3.4% to be used for general working capital of the Group.

Lego Corporate Finance Limited is the Sponsor and Great Roc Capital Securities Limited is the Sole Bookrunner. Lego Securities Limited and Great Roc Capital Securities Limited are the Joint Lead Managers of the Share Offer.

Business Overview

In respect of BCI’s clubbing operations, BCI derives its revenue mainly from sales of beverage, entrance fee income, sponsorship income and sales of other products and services. For the two years ended 31 May 2016 and the four months ended 30 September 2016, net sales of beverage for its clubs represented approximately 89.7%, 91.4% and 89.3% of its revenue from clubbing operations, respectively. Champagne is BCI’s principal beverage product. During the same period, sales of Champagne represented approximately 44.5%, 45.8% and 42.2% of its gross sales of beverage, respectively.

With BCI’s directors identifying the growth potential of the Japanese-style curry cuisine in the Hong Kong market, BCI entered the restaurant market by establishing its first “Tiger” branded restaurant targeting mass market customers in April 2014. The estimated average expenditure per customer per meal in BCI’s “Tiger" branded restaurants is within the range of HK$72 to HK$137.

For the two years ended 31 May 2016, BCI recorded a revenue of approximately HK$67.4 million and HK$88.9 million, respectively; and net profit of approximately HK$7.1 million and HK$ 8.4 million. For the four months ended 30 September 2016, BCI recorded a revenue of approximately HK$30.6 million, and net loss of approximately HK$6.8 million.

Competitive Strengths

Followings are the competitive strengths of the Group:

1) Leading position with strong brand recognition

According to the F&S Report, BCI was one of the leading market players in the clubbing market in Hong Kong in terms of revenue for the year ended 31 May 2016 with a market share of approximately 10.6%. One of BCI’s clubs, Volar, is internationally recognised. In May 2016, Volar was awarded “Asia’s Best Club” by the Asian Club and Bar Association. In December 2016, Volar and Fly were awarded “Quality Bar Label Award” by the Hong Kong Bar & Club Association.

2) Well-designed clubs and restaurants in prime locations with diverse offerings

All of BCI's restaurants and clubs are strategically located in prime areas. Volar and Fly are situated in Central, a night entertainment district in Hong Kong. Volar targets customers with strong spending power and aims to provide a premium clubbing experience, while Fly aims to appeal to the younger white collar professionals and university students and graduates and provide a high-end clubbing experience. BCI’s restaurants are strategically located in Causeway Bay and Tsim Sha Tsui. The Company believes these areas generate substantial customer and pedestrian traffic with high accessibility and visibility.

3) Established relationships with its major suppliers

BCI had established relationship with its largest supplier for over three years and with its five largest suppliers ranged from one to three years. As confirmed by Moët Hennessy Diageo Hong Kong Limited (“MHD”), BCI’s largest supplier, which is a premium supplier of prestigious alcoholic beverage brands, BCI was one of its top five customers among its “on premise” channel customers for the two years ended 31 May 2016. BCI believes established relationships with its suppliers and its volume of purchase give BCI greater bargaining power in cost negotiation and ensure the stability in the supply of products BCI needs.

4) Experienced management team with industry knowledge

BCI has an experienced management team with expertise in the food and beverage and entertainment business. Mr. Ng Shing Joe Kester, BCI's chairman and executive director, started investing in food and beverage and entertainment business since 2005 and is familiar with industry trends, market behavior, customer and supplier impact and dealing with competitions and other operational challenges. Ms. Lau Sze Yuen, BCI's executive director, has over 15 years of experience in the food and beverage and entertainment industry. BCI’s directors believe that the collective experience and knowledge of its management team would enable it to understand the needs of its customers and industry trends timely and efficiently, as well as formulating and implementing its business strategies to drive its future business growth.

Future Strategies

Looking forward, the Group intends to pursue the following strategies:

1) Continue to expand and diversify its outlet network

To diversify and expand its presence in the night entertainment market, BCI plans to establish two upmarket sports-themed bars in Wan Chai, Sheung Wan or Causeway Bay. By adding potential Sports Bars to existing outlet portfolio, it is believed that the offering could be diversified and BCI would be able to penetrate into the existing and new customer base. This also could increase awareness of BCI’s brands and build a scalable business, as well as forge stronger connections with beverage suppliers.

BCI plans to establish a standalone restaurant in Tsing Yi and Tai Koo Shing, and a food court restaurant in Cheung Sha Wan and Kwun Tong. BCI will strategically choose to open the potential restaurants in shopping malls in commercial and residential neighbourhoods, which should bring high customer traffic and repeated customers.

BCI’s directors believe that planned expansion will help BCI achieve scale, which will result in a positive impact on the investment payback period. More fixed-price set meals featuring combinations of drink, a main dish and a side dish are planned to launch, which could be quickly prepared at a lower cost. BCI will increase its efforts in encouraging its customers to purchase set meals instead of a single main dish. This will allow it to better manage and plan for customer spending and sourcing of raw materials, increase sales of its targeted food items, and speed up operations in a restaurant by shortening food preparation time, menu ordering time and its servicing time. BCI will monitor current food trends and launch seasonal or trendy food items with higher margins.

2) Upgrade its club facilities

BCI’s directors believe that the demand for its clubs is highly susceptible to the changing lifestyle trends and tastes. Operating in a competitive business, BCI recognises that renovation would provide an opportunity for it to update its venues, refresh its brand image and attract customers. BCI plans to upgrade and renovate Fly in or around the second quarter of 2017 and Volar in or around the first quarter of 2018 to ensure that each remains attractive to its customers.

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About BCI Group Holdings Limited

BCI, a food and beverage and entertainment group in Hong Kong, owns and operates two night entertainment clubs, namely Volar and Fly, and three “Tiger” branded restaurants, namely “Tiger Curry”, “Tiger Curry Jr.” and “Tiger Curry & Cafe”. According to the Frost & Sullivan Report, BCI was one of the leading market players in the clubbing market in Hong Kong in terms of revenue for the year ended 31 May 2016 with a market share of approximately 10.6%. The “Tiger” branded restaurants provide Japanese-style curry dishes and are strategically located in prime areas with broad appeal.

Contacts

Stimulus Investor Relations Ltd.
Ms. Hill Ho, +852 3159 2944
hill.ho@stimulus-ir.com
or
Mr. Michael Yeung, +852 3159 2994
michael.yeung@stimulus-ir.com

Contacts

Stimulus Investor Relations Ltd.
Ms. Hill Ho, +852 3159 2944
hill.ho@stimulus-ir.com
or
Mr. Michael Yeung, +852 3159 2994
michael.yeung@stimulus-ir.com