Tam Jai International Co. Limited Announces Details of Proposed Listing on the Main Board of The Stock Exchange of Hong Kong Limited

Highlights

• TJI is a leading and renowned restaurant chain operator of the TamJai Yunnan Mixian (譚仔雲南米線) and TamJai SamGor Mixian (譚仔三哥米線) branded fast casual restaurant chains in Hong Kong with operations also in Mainland China and Singapore
• Specialising in mixian – a type of rice noodle, and with over 24 years of history, the Group has successfully established a strong reputation in Hong Kong’s food culture
• TJI’s market share has risen from 58.5% in 2019 to 64.4% in 2020 and has remained the No.1 Asian noodle specialty restaurant operator in Hong Kong(1)
• With a growing brand portfolio and a proven track record, TJI operates a total of 156 restaurants, comprising 76 TamJai restaurants and 74 SamGor restaurants covering all 18 districts across Hong Kong Island, Kowloon and New Territories, as well as three TamJai restaurants in Shenzhen, Mainland China and three SamGor restaurants in Singapore
• Number of stores has risen 45.8% from 107 restaurants as at 1 April 2018 to 156 restaurants in Hong Kong, Mainland China and Singapore as at the Latest Practicable Date(2)
• Highly standardised and scalable business model allows TJI to replicate its restaurant model in other new markets efficiently, systematically and successfully
• Performance for the four months ended 31 July 2021 has recovered to substantially the same level as, or better than, the level before the social movement and the outbreak of COVID-19
  • Revenue increased by 38.6% from that for the four months ended 31 July 2020, reaching 135.3% of that for the four months ended 31 July 2019
  • Average daily revenue per restaurant increased by 15.6% from that for the four months ended 31 July 2020, and 98.9% of that for the four months ended 31 July 2019
  • Average number of bowls served per seat per day increased by 12.4% from that for the four months ended 31 July 2020, reaching 95.5% of that for the four months ended 31 July 2019

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(Hong Kong, 22 September 2021) – Tam Jai International Co. Limited (“TJI” or the “Company”; TJI together with its subsidiaries as the “Group”), a leading and renowned mixian specialised fast casual restaurant chain in Hong Kong, Mainland China and Singapore, announced the details of its proposed listing on the Main Board of The Stock Exchange of Hong Kong Limited (“SEHK”) under the stock code 2217 today.

 

Offering Details
The Group plans to offer 335,008,000 shares (the “Offer Shares”), 90% of which are for the International Offering (subject to reallocation and over-allotment option) and 10% are for the Hong Kong Public Offering (subject to reallocation). The indicative Offer Price range is between HK$3.33 and HK4.17 per Offer Share. After deduction of relevant expenses and assuming an Offer Price of HK$3.75 per Offer Share, being the mid-point of the indicative Offer Price range, and assuming the over-allotment option is not exercised, the net proceeds are estimated at approximately HK$1,177.6 million.

The Hong Kong Public Offering will begin at 9:00 a.m. on 23 September 2021 (Thursday) and ends at 12:00 noon on 28 September 2021 (Tuesday). The final Offer Price and allotment results will be announced on 6 October 2021 (Wednesday). Dealing of Shares under the stock code 2217 is expected to commence on the SEHK on 7 October 2021 (Thursday). Shares will be traded in board lots of 1,000 Shares each.

Guotai Junan Capital Limited is the Sole Sponsor; Guotai Junan Securities (Hong Kong) Limited and China International Capital Corporation Hong Kong Securities Limited are the Joint Global Coordinators, Joint Bookrunners and Joint Lead Managers; Daiwa Capital Markets Hong Kong Limited, China Tonghai Securities Limited and ABCI Capital Limited are the Joint Bookrunners and Joint Lead Managers.

 

Investment Highlights
Leading market position in Hong Kong with extensive restaurant network
TJI is a renowned restaurant chain operator specialising in mixian and holds a leading market position in Hong Kong. According to Euromonitor, in terms of revenue in 2020, TJI ranked first in the Asian noodle specialty restaurant market with a market share of 64.4%; and ranked second in the fast casual restaurant market with a market share of 10.0%. As at the Latest Practicable Date, the Group had an extensive restaurant network with 156 restaurants in Hong Kong, Singapore and Mainland China. Among them, 150 are located in Hong Kong, covering all 18 districts across Hong Kong Island, Kowloon and New Territories. The Group expanded into Singapore and Mainland China in October 2020 and April 2021, respectively. TJI operated three restaurants each in Mainland China and Singapore as at the Latest Practicable Date.

Pioneer in the mixian market in Hong Kong with strong brand recognition

With over 24 years of experience, TJI has gained a reputation for being a pioneer of the mixian cultural phenomenon and TamJai and SamGor are the most recognised Asian noodle brands in Hong Kong. Renowned for providing quality and tasty mixian, TamJai and SamGor brands have become popular among consumers for their iconic and charismatic tastes, consistent quality, friendly customer service and good value for money. The Group has placed great effort on marketing so as to increase brand loyalty and attract new customers. As a testament to the quality of its products, services and popularity, the Group has received numerous awards and accolades over the years. The growing popularity of its brands and the increasing brand equity have enabled TJI to capture new market opportunities to accelerate its growth.

Popular new generation comfort food
After years of development, dedication and fine-tuning, TJI’s unique combination of traditional mixian, Southwestern Chinese spicy soup base and popular Hong Kong-style toppings has become a popular new generation comfort food in Hong Kong’s culinary culture. From the levels of spiciness of the different soup bases to various toppings on offer, TJI provides customers with the comfort, memories and excitement that comes from customising their own bowl of mixian. The personalised yet affordable gourmet experience is not common in other restaurants, and it is believed to be what makes TJI special in the market and for its customers. As a popular new generation comfort food, TJI’s mixian is favoured by customers from all walks of life, and particularly the younger generation, which allows the Group to continue to attract new customers from this youth segment, enabling continuous growth.

Highly standardised and scalable business model which facilitates future growth
In order to manage its sizeable operation, TJI has established a highly standardised and scalable business model which greatly facilitates its future growth. This model, consists of standardised food processing procedure, cooking equipment designed and jointly-developed by TJI, functioning central kitchen and centralised procurement policy, enables TJI to scale up its business more easily and reinforce its foundation for future expansion. Underpinned by such a scalable business model, the TJI restaurant network has grown from 107 restaurants in 1 April 2018 to 156 restaurants as at the Latest Practicable Date, covering Hong Kong, Mainland China and Singapore. The Group believes the same model can help reduce the initial capital expenditure associated with opening new restaurants, hence improve the scalability of its business. As such, they believe it enables them to replicate its business model in other new markets efficiently, systematically and successfully.

Resilient business model with solid track record amidst challenging times

The business model of TJI has a proven track record of resilience. During the Track Record Period, the Hong Kong food and beverage industry experienced various challenges due to the local social movement and the COVID-19 pandemic. Notwithstanding the disruptions the Group faced, TJI has managed to sustain growth in the number of restaurants and generated relatively stable revenue. The number of restaurants has increased by 45.8% from 107 restaurants as at 1 April 2018 to 156 restaurants in Hong Kong, Mainland China and Singapore as at the Latest Practicable Date. Furthermore, the Group’s revenue has increased from HK$1,556.2 million for the year ended 31 March 2019 to HK$1,794.7 million for the year ended 31 March 2021, representing a CAGR of 7.4%.

The agile manpower management system is one of the keys that has allowed the Group to maintain high operational efficiency. In addition, the Group has strived to achieve close to zero wastage by implementing inventory management measures at store level to ensure ingredients are fresh. In addition, TJI’s food is highly suitable for takeaway, as such, the impact of any anti-pandemic measures restricting dine-in service on the business is comparatively less significant. The Group is able to fulfil takeaway and delivery orders swiftly and capture more sales during peak time. Moreover, the extensive restaurant network that the Group has built in Hong Kong over the years has also facilitated the sale of food through takeaway and delivery services on a wider geographical scale. Therefore, the Group’s revenue from takeaway and delivery orders has increased from 20.6% for the year ended 31 March 2019 to 49.6% for the year ended 31 March 2021.

Stringent food safety and quality control measures
To ensure the taste of its food and quality of its services are at a consistently high level, TJI implements stringent food safety and quality control measures covering different operational aspects, including (i) procurement; (ii) food processing; (iii) storage; (iv) logistics; (v) restaurant operation; and (vi) customer service. Headed by an industry veteran with over 20 years of relevant experience, the quality assurance department establishes and oversees the quality control measures at both the central kitchen level and restaurant level as well as safeguards TJI’s mixian from sourcing to serving – ensuring that customers have a consistent and enjoyable dining experience.

Experienced management team with extensive industry knowledge
The Group has an experienced management team led by Mr Lau Tat Man, the chairman of the board of directors, chief executive officer and executive director of TJI. Mr Lau has over 32 years of experience in the food and beverage industry in Hong Kong, and possesses a solid understanding of the local market and international market, as well as experience in formulating development strategies, implementing measures for standardising operations, raising the quality of food and services, and managing international restaurant operations and franchising. The Group also has a professional senior management team that possesses extensive industry knowledge which they believe is crucial to the implementation of its business strategies and helps the Group maintain sustainable growth in the future.

 

Future Strategies
According to Euromonitor, the fast casual restaurant market in Hong Kong is forecasted to grow at a CAGR of approximately 11.8% from HK$16.9 billion in 2020 to HK$29.5 billion in 2025 in terms of revenue, outpacing the casual restaurant market and the consumer food service industry in Hong Kong.

A similar trend can also be witnessed in other markets including Mainland China, Singapore, Australia and Japan. According to Euromonitor, the fast casual restaurant market in Mainland China is forecasted to grow at a CAGR of 11.6% from US$65.5 billion in 2020 to US$113.6 billion in 2025 in terms of revenue, outpacing the casual restaurant market and the consumer food service industry in Mainland China. In Singapore, the fast casual restaurant market is forecasted to grow at a CAGR of 11.3% from US$0.8 billion in 2020 to US$1.4 billion in 2025 in terms of revenue, outpacing the casual restaurant market and the consumer food service industry in Singapore.

TJI believes that its business model is highly efficient and scalable, and that its customisable mixian and distinctive spicy soup bases are key elements which enable it to firmly engage with customers. The Group also believes that the tastes and spiciness of its food and the style of mixian served in soup suit the palate of Chinese and Asian consumers, hence will be widely popular in Mainland China and Asia. The Group therefore plans to expand its restaurant network in existing regions and also other countries which have considerable Chinese and Asian populations so as to capture opportunities for fuelling its growth.

Between FY2021 and FY2024, the Group plans to open approximately 38, 71, 24, 25 and 15 new restaurants in Hong Kong, Mainland China, Singapore, Japan and Australia respectively, all of which will be self-operated by TJI. Moreover, the Group plans to expand its central kitchen in Hong Kong with a view to grow its restaurant network in the city. In addition, the Group plans to establish new central kitchens in Mainland China, Singapore and Australia, respectively, as well as expand its restaurant network outside of Hong Kong. To facilitate the Group’s new market entries, it also intends to conduct various marketing and promotional activities to support its expansion and aid brand building in the aforementioned regions.

Apart from its expansion plan, the Group also intends to refurbish its restaurants and enhance its equipment to improve the customer experience and operational efficiency. Additionally, to further encourage engagement with customers and boost efficiency, the Group plans to strengthen its digital platform by introducing a CRM system, a mobile application with voice ordering system, and an ERP system, as well as upgrade its information and technology infrastructure.

The Group has always strived to grow and envisions its two restaurant brands will become among the most popular in Hong Kong and potentially other regions. To strengthen their image, popularity and business growth, the Group plans to continue its marketing and branding efforts. In addition, the Group has practices and plans for driving restaurant revenue growth, including the introduction of new and premium toppings, enhancing suggestive selling, introduction of breakfast menu, improving overall efficiency for operational excellence and localising marketing efforts with promotional offers that celebrate and promote the opening of new restaurants, etc. The Group is well positioned to drive business growth and continue its role as innovator and pioneer of the mixian market.

 

Financial Highlights

	For the year ended 31 March
(HK$’000)	2019	2020	2021	CAGR
Revenue	1,556,173	1,691,179	1,794,693	7.4%
Profit for the Year	197,709	190,896	287,792	20.7%
Profit Margin for the Year	12.7%	11.3%	16.0%	N/A

 

Use of Proceeds
Assuming the over-allotment option is not exercised and the Offer Price is fixed at HK$3.75 per Offer Share (being the mid-point of the indicative Office Price range), and after deduction of underwriting fees and other estimated expenses in connection with the Global Offering, net proceeds are estimated at approximately HK$1,177.6 million and will be used for:

Items	Percentage
Expansion of restaurant network in Hong Kong, Mainland China, Singapore, Japan and Australia	57.4%
Expansion of central kitchen in Hong Kong and establishment of new central kitchens in Mainland China, Singapore and Australia respectively	9.4%
Refurbishment of restaurants and enhancement of operating equipment	10.5%
Introducing a CRM system, a voice ordering system, and an ERP system as well as upgrading the information and technology infrastructure	5.1%
International brand building and new market entry promotion	7.8%
General corporate purposes and working capital	9.8%

(1) In terms of both revenue and number of restaurants in 2020, according to Euromonitor
(2) Latest Practicable Date refers to 13 September 2021

 

This press release is not for distribution, directly or indirectly, in or into the United States (including its territories and possessions, any state of the United States and the District of Columbia) or any other jurisdiction where such distribution is prohibited by law, and does not, and is not intended to be or constitute an offer to sell, or an invitation or solicitation of any offer to buy or subscribe for, the securities of in the United States or any other jurisdiction. The securities referred to herein have not been and will not be registered under the Securities Act of 1933, as amended (the “Securities Act”) or any states securities laws of the United States and may not be offered and sold within the United States absent an applicable exemption from, or in a transaction not subject to, the registration requirements of the Securities Act. The securities referred to herein have not been and will not be registered under the applicable securities laws of the PRC, Taiwan, Japan, Canada, Singapore, Malaysia, South Korea, EEA, United Kingdom or any other jurisdiction outside of Hong Kong. No public offering of the securities referred to herein will be made in the United States, or any jurisdiction outside of Hong Kong. Any public offering of securities to be made in the United States will be made by means of a prospectus that may be obtained from the Company and that will contain detailed information about the Company and management, as well as financial statements. Prospective investors are reminded to only rely on the prospectus of the Company dated 23 September 2021 in making their investment decisions.

The price of the Shares of the Company may be stabilised in accordance with the Securities and Futures (Price Stabilization) Rules (Chapter 571W of the Laws of Hong Kong). The details of the intended stabilization and how it will be regulated under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) will be contained in the prospectus of the Company dated 23 September 2021.

You are cautioned not to place undue reliance on the forward-looking statements (if any) contained herein. We can give no assurance that these forward-looking statements will prove to have been correct. Expectations reflected in these forward-looking statements are subject to change and we undertake no obligation to update or revised any forward-looking statements herein.

 

Important:
1. This press release is for information purposes and does not constitute or include any recommendation or invitation of offer for acquisition, purchase or subscription of the securities of Tam Jai International Co. Limited nor does it intend to act as a recommendation of the sale of securities or any invitation or offer for acquisition, purchase or subscription of securities. Investors should read the prospectus of the Company for detailed information about the Company and the proposed offering before deciding whether or not to purchase any securities any securities of the Company. An application to subscribe for the shares referred to in this press release by any persons shall be made solely based on the prospectus and the application forms to be issued and made available by the Company on 23 September 2021.

2. We have adopted a fully electronic application process for the Hong Kong Public Offering. We will not provide printed copies of this prospectus or printed copies of any application forms to the public in relation to the Hong Kong Public Offering. The prospectus of the Company dated 23 September 2021 will be made available at the Stock Exchange’s website at www.hkexnews.hk and the Company’s website at www.tamjai- intl.com. Please refer to the section headed “How to apply for Hong Kong Offer Shares” in the prospectus issued and made available by the Company on 23 September 2021 for the procedures through which you can apply for the Hong Kong Offer Shares electronically.