Evergreen Products Group Announces Details of Proposed Listing on Main Board of SEHK

Investment Highlights

  • Evergreen is a leading global manufacturer of hair goods, ranking fifth in synthetic hair goods sales globally with approximately 4.0% market share of global synthetic hair goods manufacturer revenue in 20161
  • The Group designs, manufactures and sells a wide range of hair goods made with synthetic fibres and human hair targeted at different ethnic groups and the Halloween market, and has a comprehensive product portfolio which captures various markets and fashion trends
  • The United States is the principal market of the Group, contributing approximately 76.3% of the Group’s revenue in 2016. Other key markets include Europe and Asia
  • The Group started to strategically deploy its production facilities in 2009, setting up production centres in Bangladesh to benefit from the lower production cost there, on top of the centres in operation in China. It currently has two production centres in Bangladesh and three in China and its plan is to build and complete four new production facilities in Bangladesh by the end of 2019
  • The Group has solid long-term relationship with customers, and its five largest customers in 2016 have had an average of approximately 20 years of business relationship with the Group
  •  Close collaboration with customers on product design, research and development enables the Group to successfully and continuously expand its product range

(28 June 2017, Hong Kong) – Evergreen Products Group Limited (“Evergreen” or the “Group”), a leading global manufacturer of hair goods, today announced the details of the proposed listing of its shares on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”).

Offering Details

The Group intends to offer 184,500,000 shares globally (subject to the exercise of the Over-allotment Option), of which 90% are for the International Placing and the remaining 10% are for the Hong Kong Public Offer. Of the 184,500,000 offer shares, there are 153,750,000 new shares to be issued by Evergreen and 30,750,000 shares to be sold from Evergreen’s Pre-IPO investor. The offer price will be not more than HK$1.90 per offer share and is currently expected to be not less than HK$1.65 per offer share, unless otherwise announced. Net proceeds from the global offering, assuming an offer price of HK$1.775 (being the mid-point of the offer price range), are estimated at approximately HK$224.4 million.

The Hong Kong Public Offer will commence at 9:00 a.m. on 29 June 2017 (Thursday), and will end at 12:00 noon on 4 July (Tuesday). The final Offer Price and the results of the allocation are expected to be announced on 11 July 2017 (Tuesday). Dealing of the Shares is expected to commence on the Main Board of SEHK on 12 July 2017 (Wednesday) under the stock code 1962. The shares will be traded in board lots of 2,000 shares each.

CIMB Securities Limited is the Sole Sponsor of the listing. CIMB Securities Limited, Guotai Junan Securities (Hong Kong) Limited and Fortune (HK) Securities Limited are the Joint Global Coordinators. CIMB Securities Limited, Guotai Junan Securities (Hong Kong) Limited, Fortune (HK) Securities Limited, China Galaxy International Securities (Hong Kong) Co. Limited, Mason Securities Limited and Huarong International Securities Limited are the Joint Bookrunners. CIMB Securities Limited, Guotai Junan Securities (Hong Kong) Limited, Fortune (HK) Securities Limited, China Galaxy International Securities (Hong Kong) Co., Limited, Mason Securities Limited, Huarong International Securities Limited and Aristo Securities Limited are the Joint Lead Manager.

Regarding the International Placing, Kaneka Corporation (41180.TYO), Beauty Star Global Limited and an individual investor have agreed to subscribe at the Offer Price for shares in an aggregate amount of approximately US$4.5 million, US$3.0 million and US$3.0 million respectively. Kaneka Corporation, the largest supplier of Evergreen during the track record period, has been supplying synthetic fibres to the Group for more than 18 years, and the owner of Beauty Star Global Limited is a substantial shareholder of a major customer of Evergreen. Such support gained from leading hair product industry players is a vote of confidence in Evergreen’s business and its growth potential.

Corporate Highlights

Leading hair goods manufacturer with comprehensive product portfolio which captures various markets and fashion trends

Evergreen boasts a comprehensive product portfolio including wigs, hair accessories and others, high-end human hair extensions and Halloween products. According to Frost & Sullivan, Evergreen is one of the five largest hair goods manufacturers in the world in terms of synthetic hair goods sales. In 2016, the Group manufactured over 15,000 different types of hair goods. Capable of producing a wide range of products, the Group can flexibly adjust its product mix as well as plan production based on the economic conditions of each target market.

The Group has solid presence in major markets including the United States, United Kingdom, China, Japan and South Africa. Its principal market is the United States, contributing approximately 76.3% to its revenue in 2016. With the demand for hair goods by consumers of African descent and native African relatively inelastic, Evergreen’s recurring products are generally in constant demand.

Lower production costs by strategically setting up production base in Bangladesh

Hair goods manufacturing is a labour intensive endeavour. Heeding that, Evergreen strategically established a production base in Bangladesh since May 2010, aiming for greater economies of scale, better management of production planning and bulk purchase of raw materials. With the Bangladesh Production Base enjoying relatively lower labour costs and favourable tax treatment, the Group has been able to minimise production costs and adopt more competitive pricing to attract new customers as well as gain a bigger market share in the human hair goods market in the United States. The Group has plans to expand its production capacity in Bangladesh by building new production facilities to be completed by end of 2019. It believes the Bangladesh Production Base, with a large pool of low cost labour, will continue to support its growth.

Solid and long-term relationship with customers

Evergreen maintains significant long-term business relationship with key customers. As at 31 December 2016, the Group had an average of approximately 20 years of business relationships with its five largest customers. The Group has worked closely with customers to design, develop and manufacture products that can capture changing fashion trends at competitive prices. This has built a stable business model that has effectively reinforced its business success. The Group intends to capitalise on the stable relationship with existing customers to continue to introduce new products and target new markets.

Close collaboration with customers on product design, research and development to successfully and continuously expand its product range

The success of Evergreen is also attributable to its innovation, research and development capabilities, the forces behind its ability to continuously expand its product range. The Group regularly collaborates with key customers in the product design and development to broaden its hair goods portfolio. Its dedicated product design and R&D teams consisted of 110 employees in China and 140 employees in Bangladesh, the key members of which each have more than 18 years of experience in the industry.

Future Strategies

According to the Frost & Sullivan Report, the size of the global hair goods market in terms of revenue is expected to grow at a CAGR of 16.7% between 2016 and 2021, driven by global economic growth and the increasing popularity of hair goods as fashion accessories among consumers in Asia, Africa and those of African descent in North America and Europe. To capture the immense opportunities in the thriving industry, Evergreen intends to step up penetrating the human hair goods market by pushing sales through existing wholesaler customers. The Group plans to construct a bleaching and dyeing complex in Bangladesh by end of 2019 dedicated to processing human hair as raw materials, which will enable the Group to offer additional human hair goods for the Caucasian and Asian markets and in turn increase sales and enhance profit margin.

The Group will develop the “high-end human hair extensions” product segment by capitalising on the know-how and trademark licence agreement it has with an European-based business partner2 and expand its offerings of high-end human hair extensions, introducing them to China and Japan, then South Korea and Thailand and eventually the rest of Asia. In addition, Evergreen will expand its Halloween product offerings to existing wholesalers and mass retailers, as well as enlarge its mass retailer base and retail customer base in the Asian market. The Group will continue to introduce more costumes to the product offerings of this segment to complement the Halloween hair goods.

To meet the anticipated increase in demand for its products, Evergreen will expand its production capacity and scope of operations in Bangladesh to include human hair sourcing, bleaching and dyeing, as well as printing and package cartoning. Currently, a new production facility GT Hand Tie Facility is being built in Bangladesh. Evergreen plans to build another three production facilities – a Bleaching and Dyeing Complex, an UEPZ Printing Facility and UEPZ Carton Facility – scheduled to complete by end of 2019. The new facilities, being in the same base, will boost the Group’s production capacity and efficiency as they will be able to consolidate raw material processing and hair goods production functions and afford shorter production lead time. At the same time, the Group will relocate its research and display centre and sales offices to Dongguan, Guangdong to consolidate them with a planned logistics centre there, thereby enhance and expand its product design, research and development and other value-added services. It will also strengthen its e-commerce business by enhancing its online sales platforms, mounting more marketing and promotional activities on the Internet and forming partnerships with well-known online sales platforms.

Use of Proceeds

Assuming an offer price of HK$1.775 per share (being the mid-point of the offer price range), the estimated net proceeds from the global offering are HK$224.4 million, which are intended for the following uses:

Item Percentage
Ÿ   Increase production capacity by constructing additional production facilities in the Bangladesh Production Base

–       To construct a Bleaching and Dyeing Complex, a GT Hand Tie Facility, an UEPZ Printing Facility and UEPZ Carton Facility



Ÿ   Relocate the research and display centre and sales office in Nantou,

Shenzhen and establish a logistics centre in Dongguan, Guangdong

Ÿ   Expand the Group’s business

–         To establish sales offices for high-end human hair extensions in Asia

–         To develop e-commerce business by improving the appearance and functionality of its online sales platforms, initiating different product lines and recruiting a professional online marketing team

–         To expand Halloween costume sales




Ÿ   Repay outstanding trade receipt loans 20.0%
Ÿ   For working capital and general corporate purposes 10.0%

Financial Highlights


(HK$ in millions)

For the year ended 31 December
2014 2015 2016
Revenue 533.9 554.5 595.7
Gross profit 174.1 194.8 211.3
Gross profit margin 32.6% 35.1% 35.5%
Profit for the year 70.4 68.7 32.8
Adjusted net profit3 64.8 67.3 86.1
Adjusted net profit margin3 12.1% 12.1% 14.5%

3 The adjusted net profit and adjusted net profit margin eliminate the effects of change in fair value of Evergreen’s redeemable convertible preferred shares and listing expenses, which have been and may continue to be significant recurring factors in its business prior to the completion of the Global Offering. They also eliminates the effect of change in fair value of its investment properties which were disposed of in April 2015. 

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About Evergreen Products Group Limited

Evergreen is a leading global manufacturer of hair goods, including wigs, hairpieces, braids and high-end human hair extensions. Since 1962 when its founder commenced trading of wig products, Evergreen has kept growing and ranked fifth in synthetic hair goods sales globally with an approximately 4.0% share of the global synthetic hair goods market by revenue in 2016. It operates on a comprehensive business model covering various aspects of the hair goods business, from initial design, research and development to final delivery. With two production centres in Bangladesh and three productions centres in China, the Group benefits from its low labour costs and large labour pools, thus enjoys economies of scale. For more details about Evergreen, please visit the Group’s website: www.epfhk.com

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