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    CAPD   BMG022411000

CAPITAL LIMITED

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EQS-News : Pangaea Connectivity Technology Limited Propose to be Listed on the Main Board of the Stock Exchange of Hong Kong, Offer Price sets between HKUSD0.52 and HKUSD0.58 per share

01/29/2021 | 11:01am EDT
EQS-News / 29/01/2021 / 23:59 UTC+8 
?For Immediate Release?                                              30 January 2021 
 
Pangaea Connectivity Technology Limited 
?????????? 
 (Incorporated in the Cayman Islands with limited liability) 
(Stock code: 1473) 
 
Propose to be Listed on the 
Main Board of the Stock Exchange of Hong Kong 
 
Offer Price sets between HKUSD0.52 and HKUSD0.58 per share 
Raise up to approximately HKUSD88.4 million net proceeds 
 
[Hong Kong-30 January 2021] Pangaea Connectivity Technology Limited ("Pangaea" or the "Company", together with its 
subsidiaries, the "Group", stock code:1473), a 30 years' experienced distributor of connectivity products for telecom 
infrastructure, data centre and IoT, announces its proposed listing on the Main Board of The Stock Exchange of Hong 
Kong Limited (the "SEHK") today. The Company principally sources and distributes connectivity products - devices to 
transmit and receive signal or data, and provides solutions and technical support for (i) telecom infrastructure; (ii) 
data centres; (iii) IoT and network connectivity products; and (iv) commercial lasers. According to Frost & Sullivan, 
the Company ranked third in terms of revenue among the service providers in the telecom and datacom connectivity 
product distribution market in the People's Republic of China (the "PRC") in 2019, with a market share of approximately 
4.4%. 
Pangaea plans to offer (the "Share Offer") an aggregate of 250,000,000 shares (subject to the over-allotment option) 
(the "Offer Shares"), of which 25,000,000 shares are for Hong Kong public offering (subject to reallocation), and the 
remaining 225,000,000 shares (including 25,000,000 employee reserved shares) are for placing (subject to reallocation 
and over-allotment option), at an offer price between HKUSD0.52 to HKUSD0.58 per shares (the "Offer Price"). The public 
offering will commence at 9:00am on 30 January 2021 and close at 12:00 noon on 4 February 2021. Trading of its shares 
on the Main Board of the SEHK is expected to commence on 19 February 2021 (Friday). The share will be traded under the 
stock code 1473 in board lots of 4,000 shares. 
 
Honestum International Limited is the sole sponsor. CMBC Securities Company Limited, Forwin Securities Group Limited 
and Lego Securities Limited are the joint global coordinators, the joint bookrunners are CMBC Securities Company 
Limited, Crosby Securities Limited, Forwin Securities Group Limited, GLAM Capital Limited and Lego Securities Limited. 
CMBC Securities Company Limited, Crosby Securities Limited, Enhanced Securities Limited, Forwin Securities Group 
Limited, GLAM Capital Limited, Lego Securities Limited and Victory Securities Company Limited are joint lead managers. 
 
Introduction of Pangaea 
Founded in 1990, Pangaea has been a distributor of telecom and datacom connectivity products and provides solution and 
application support to customers throughout their design and production cycle. In general, the Group's customers 
incorporate the components through design-in with its technical team and procure those components from the Group to 
build their communications modules and systems and IoT and network connectivity products. The end applications of the 
Group's products can primarily be categorised into: (i) telecom infrastructure; (ii) data centres; (iii) IoT and 
network connectivity products; and (iv) commercial lasers, which accounted for 68.8%, 17.3%, 11.5% and 2.3%, 
respectively, of the total revenue for the year ended 31 March 2020 and 77.0%, 15.9%, 6.0% and 1.0%, respectively, of 
the total revenue for the four months ended 31 July 2020. 
 
According to Frost & Sullivan, it is market practice to have distributors as middlemen in the industry due to the 
diversity and complexity of the telecom and datacom connectivity industry. Being a distributor with strong inhouse 
design and technical capabilities, as well as self-own wireless and commercial laser application laboratories in 
Shenzhen, Pangaea plays an important role in the industry chain to bridge the functionality gap between upstream 
component manufacturers and downstream customers with technical support and value-added services. With a strong 
in-house design and technical team, engineering expertise and in-depth knowledge of the supply chain, the Group can 
provide suggestions in manufacturers' product upgrade and/or development of new products. 
 
Pangaea has long term and well-established business relationships with its manufacturer suppliers, who are mainly 
global leading brand manufacturers in the respective products categories in the telecom and datacom connectivity market 
according to Frost & Sullivan. As at 22 January 2021, the Group was an authorised distributor of seven manufacturers 
comprising (i) five brand name manufacturers based in the U.S. or Japan for an average of 19 years; and (ii) two 
manufacturers based in the PRC with effect from 1 September 2020 and 1 October 2020, respectively. For the years ended 
31 March 2018, 2019 and 2020 and the four months ended 31 July 2020, purchases attributable to the Group's five largest 
suppliers accounted for approximately 87.7%, 88.2%, 87.1% and 91.7% of its total purchase, respectively. For the same 
period, a substantial portion of its purchases, which accounted for approximately 88.4%, 90.1%, 89.5% and 93.4% of our 
total purchases, respectively, were made directly from manufacturers. 
 
The Group also diligently cultivates long-term customer relationships with diversified customers, which mainly includes 
two leading network system equipment providers, communications module manufacturers, providers of IoT and connectivity 
solutions and products, and other distributors in the PRC. For each of the three years ended 31 March 2018, 2019 and 
2020 and the four months ended 31 July 2020, sales to the Company's five largest customers accounted for approximately 
49.1%, 40.3%, 47.9% and 64.4% of its total revenue, respectively, with sales to its largest customer accounted for 
approximately 17.1%, 10.6%, 17.5% and 41.5% of its total revenue, respectively. 
 
The Group's revenue was approximately HKUSD843.1 million, HKUSD871.3 million, HKUSD970.9 million and HKUSD758.5 million for the 
years ended 31 March 2018, 2019 and 2020 and the four months ended 31 July 2020, respectively. Its net profit for the 
year ended 31 March 2018, 2019 and 2020 and the four months ended 31 July 2020 was approximately HKUSD34.9 million, 
HKUSD27.6 million, HKUSD33.4 million and HKUSD42.4 million, respectively. 
 
 
Pangaea's Competitive Strengths 
With over 30 years of proven track records, the Company believes that it has the following competitive strengths to 
contribute to its continued success and potential for growth: 
  ? Possesses strong design and technical capabilities with a strong and experienced in-house design and technical team 
    comprised 33 engineers, of which about 22 members have over 10 years of experience in the industry 
  ? Has its own wireless and commercial laser application laboratories in Shenzhen, the main tech hub of the PRC allows 
    the Group to conduct reference designs, manufacture demo board, device testing and troubleshooting for its 
    customers 
  ? Has long term and well-established business relationships with its manufacturer suppliers, including five top brand 
    name suppliers based in the U.S. or Japan, enables the Group to secure source of supplies and obtain the latest 
    product and technology information, which increases its familiarity and knowledge of their products 
  ? Diligently cultivates long-term customer relationships with its major customers which allows the Group to offer 
    customer-driven products and provide reliable and efficient sourcing and technical support services 
  ? Has an experienced and dedicated management team with significant industry expertise in the telecom and datacom 
    connectivity industry which allows the Group to capture market opportunities, enhance its relationship with key 
    customers and suppliers, and formulate and implement development strategies effectively 
Values Pangaea Creates 
As a channel partner of manufacturer suppliers in marketing and distributing their products, as well as a service 
provider of customers to support their product roadmaps, Pangaea creates the following values to suppliers and 
customers, respectively. 
 
To customers, Pangaea can 
  ? Provide specified sourcing and selection of components 
  ? Proactively secure supply for customers 
  ? Enable customers to have access to the latest advanced technologies and components from manufacturers to achieve 
    optimal performance 
  ? Provide bridging for the access of technologies between suppliers and customers 
  ? Provide technical knowhow and talent to achieve customers' design at the optimal performance and reliability levels 
    and satisfaction 
To manufacturer suppliers, Pangaea can 
  ? Create demand for components sourced from brand name component manufacturers 
  ? Provide customers' feedback and suggestions for next generation products development and upgrade 
  ? Provide bridging for the access of technologies between suppliers and customers 
Use of Proceeds 
The Group intends to use the proceeds of the Share Offer, after deducting related underwriting fees and commissions and 
estimated expenses payable in connection with the Share Offer and assuming an Offer Price of HKUSD0.55 per Offer Share 
(being the mid-point of the Offer Price range), of approximately HKUSD88.4 million, for the following purposes: 
  ? 65.6%, or HKUSD58.0 million is expected to be used to strengthen the Group's design and technical capabilities; 
  ? 16.3%, or HKUSD14.4 million is expected to be used to broaden the Group's customer base by expanding the geographic 
    reach of the Group's sales and technical support coverage; and 
  ? 8.2%, or HKUSD7.2 million is expected to be used for strengthening its back office operational supports; and 
  ? 9.9%, or HKUSD8.8 million is expected to be used as its general working capital 
- End - 
About Pangaea Connectivity Technology Limited 

(MORE TO FOLLOW) Dow Jones Newswires

January 29, 2021 11:00 ET (16:00 GMT)

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Financials (USD)
Sales 2021 222 M - -
Net income 2021 36,8 M - -
Net Debt 2021 45,1 M - -
P/E ratio 2021 6,09x
Yield 2021 2,35%
Capitalization 225 M 225 M -
EV / Sales 2021 1,21x
EV / Sales 2022 0,98x
Nbr of Employees 671
Free-Float 72,7%
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Managers and Directors
Charles Roland Giles Everist Chief Financial Officer
Jamie Phillip Boyton Executive Chairman
Jodie North Chief Operating Officer
Alexander John Davidson Independent Non-Executive Director
David Gary Abery Senior Independent Non-Executive Director