Kerry Logistics Announces Details of Proposed Listing on Main Board of the HKEx

Kerry Logistics Announces Details of Proposed Listing on Main Board of the HKEx

2013-12-05 Hong Kong

Kerry Logistics Network Limited (“Kerry Logistics” or the “Company”), a leading logistics service provider in Asia, today announced the details of its proposed listing on the Main Board of The Stock Exchange of Hong Kong Limited (“HKEx”).

The Global Offering initially consists of an aggregate of 216,071,500 Offer Shares, of which 194,464,000 shares will be offered via International Placing and 21,607,500 shares will be offered under the Hong Kong Public Offering. In addition, the Company intends to grant to the International Underwriters, according to the International Underwriting Agreement, an over-allotment option to allot and issue an aggregate of up to 15% of the initial number of Offer Shares available under the Global Offering.

The indicative offer price will range at between HK$8.80 and HK$10.20 per share. With the mid-point of the indicative offer price range being HK$9.50 per Offer Share, the Company’s net proceeds from the Global Offering would amount to approximately HK$1,907.9 million, before any exercise of the over-allotment option.

The Hong Kong Public Offering will open at 9:00 a.m. on Friday, 6 December 2013, and will close at 12:00 noon on Wednesday, 11 December 2013. The offer price is expected to be determined on Thursday, 12 December 2013 (Hong Kong time), and the allotment results will be announced on Wednesday, 18 December 2013. Trading of the Company’s shares on the HKEx is expected to commence on Thursday, 19 December 2013 under the stock code 636. Shares will be traded in board lots of 500 shares.

George YEO, Chairman of Kerry Logistics, said, “This is an exciting moment for Kerry Logistics. We are about to gain our independent listing status on the Hong Kong Stock Exchange to ride a rising Asian tide. China has overtaken the U.S. as the world's No. 1 trading nation and has become the largest trading partner for 128 countries in the world. China-ASEAN trade is estimated to be more than doubling from US$400 billion last year to $1 trillion in 2020. The big story is China itself and intra-Asian trade, and logistics is the lifeblood of the economy. Kerry Logistics, as an Asian specialist with China focus and global network, has laid a solid foundation in the Greater China and ASEAN logistics markets and is well-positioned to capitalise on the growing intra-Asian trade.”

The Company intends to use approximately 51% of the total estimated net proceeds from the Global Offering for funding capital expenditures in connection with future expansion and acquisition activities; approximately 40% for repaying part of the loans from a fellow subsidiary controlled by Kerry Properties Limited; and approximately 9% for working capital and general corporate purposes.

BOCI Asia Limited, Citigroup Global Markets Asia Limited, HSBC Corporate Finance (Hong Kong) Limited and Morgan Stanley Asia Limited (in alphabetical order) are the Joint Sponsors. BOCI Asia Limited, Citigroup Global Markets Asia Limited, The Hongkong and Shanghai Banking Corporation Limited and Morgan Stanley Asia Limited (in alphabetical order) are the Joint Global Coordinators. BOCI Asia Limited, CIMB Securities Limited, Citigroup Global Markets Asia Limited, DBS Asia Capital Limited, The Hongkong and Shanghai Banking Corporation Limited, Mizuho Securities Asia Limited and Morgan Stanley Asia Limited (in alphabetical order) are the Joint Lead Managers. BOCI Asia Limited, CIMB Securities Limited, Citigroup Global Markets Asia Limited, The Hongkong and Shanghai Banking Corporation Limited and Morgan Stanley Asia Limited (in alphabetical order) are the Joint Bookrunners.

Market leader in Greater China and Asia, the fastest growing logistics markets in the world
Kerry Logistics is a leading logistics service provider in Asia, in terms of revenue and GFA of warehouse managed, as well as the largest Hong Kong-based international third-party logistics service provider. Kerry Logistics is principally engaged in the integrated logistics and international freight forwarding businesses. Its integrated logistics business provides a wide range of logistics services within a country or territory for manufacturers, retailers and other customers, primarily in Asia, and leasing of warehousing space in Hong Kong; while its international freight forwarding arm is engaged in the provision of air freight, ocean freight and cross-border road freight forwarding, as well as cargo transport services, across the world.

The Company currently has more than 400 service locations in 35 countries and territories. With the wide range of service offerings and scalable distribution network, the Company is able to accommodate customers’ needs at both a domestic and regional level and deliver effective solutions in a multi-cultural environment. An example of its unique network coverage is KART (“Kerry Asia Road Transport”), through which Kerry Logistics operates a cross-border road transportation network covering six ASEAN countries and China using self-owned trucks, demonstrating its core competency in the areas of customs brokerage and clearance.

Customised solutions embedded into customers’ supply chains
Kerry Logistics provides customised end-to-end solutions to meet its customers’ supply chain needs. These include traditional inventory storage, trucking and distribution services and returns management, as well as diverse value-added services designed for different types of manufacturers, retailers and other customers, as well as a combination of air, ocean and cross-border road freight forwarding services. The substantial scale of logistics facilities managed by the Company, coupled with its strong regional and local presence in Asia and its comprehensive freight forwarding service offerings, has enabled it to deliver customised end-to-end supply chain solutions to its customers and provide them with global access to and within the Asian markets. The Company cross-sells its integrated logistics and international freight forwarding services to many of its customers located worldwide.

Long-standing relationships with a wide and diversified customer base
Most of Kerry Logistics’ key customers are multi-national corporations and it currently serves more than 40 of the Top 100 Brands (ranked by Interbrand, a well-recognised global brand consultancy). For the six months ended 30 June 2013, its five largest customers accounted for only 7.8% of its total revenue, reflecting the diversity of its customer base. By leveraging its experience in serving the supply chains in various industries, the Company has developed significant industry expertise and applied innovative processes across industries to better serve its customers. It has also been successful in offering industry-specific solutions for a wide range of industries. Most of the Company’s customers have developed long-term relationships with it, with approximately 52% of its key integrated logistics operations customers in Hong Kong having been with the Company for more than five years as at 30 June 2013.

Asset ownership model offering increased flexibility and reliability
Kerry Logistics makes significant investments in upgrading or maintaining its self-owned logistics facilities so as to better serve its customers. As at 28 November 2013, Kerry Logistics managed approximately 39 million sq.ft. of logistics facilities, of which approximately 55% was self-owned and the vast majority located in Asia. This asset-ownership model provides greater flexibility in modifying and optimising the utilisation of facilities for different services and allows higher operating leverage due to the absence of rental cost exposure. It also offers greater reliability and product security to customers, which is especially preferred by customers in Asia, thereby enhancing the Company’s ability to secure long-term service agreements and differentiating Kerry Logistics from its peers in Asia.

Kerry Logistics realised strong business growth in the past few years. Its revenue grew at a CAGR of 33.2% from HK$10,879.9 million in 2010 to HK$19,294.8 million in 2012 and at 6.3% year-on-year between 30 June 2012 and 30 June 2013. Core net profit also grew at a CAGR of 10.7% from HK$665.2 million in 2010 to HK$815.7 million in 2012 and at 5.9% year-on-year between 30 June 2012 and 30 June 2013.

Profit attributable to the Company’s shareholders for the year ending 31 December 2013 is expected to amount to not less than HK$1,829 million. Excluding the after-tax effect of change in the fair value of investment properties and gains on the disposal of Kerry D.G. Warehouse in Kowloon Bay, the forecast core net profit for the period will be not less than HK$880 million.

William MA, Group Managing Director and Executive Director of Kerry Logistics, said, “With globalisation, we manage the increasingly complex and multi-dimensional supply chains for our clients. We pair opportunities with solutions, whether it’s matching material supply with production, inventory with sales or a product with the market. We believe our strength lies in our ability to provide customised and competitive supply chain solutions to meet domestic needs and global demand.”

Looking forward, the Company will continue to strengthen its presence in integrated logistics across Asia and further expand its global network by focusing on volume, scale and coverage. It will also aim to grow its existing businesses with the support of additional investment and acquisition activities.

Mr. Ma concluded, “In our over 30 years of history, we have established a proven track record of solid growth through acquisitions and organic growth, as well as our capability in identifying acquisition opportunities and successfully integrating the acquired companies into our operations. Our ability to turn around the acquired companies is proof of our strong understanding of the industry and ability to operate in regions with different cultures. We are confident that we will further strengthen our leadership position and our reputation as the Asia specialist in the global logistics industry with our China focus and our global network.”

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