TodayIR: Pangaea Connectivity Technology Limited: Pangaea Connectivity Technology 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

DJ 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

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

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DJ EQS-News: Pangaea Connectivity Technology Limited -2-

Founded in 1990, Pangaea Connectivity Technology Limited is a 30 years' experienced distributor of connectivity products for telecom infrastructure, data centre and IoT. The Company primarily focuses on providing IoT and network connectivity solution and application support to its long-standing customers which consists of communications module manufacturers and leading network system equipment providers and providers of IoT and connectivity solutions and products in the PRC. According to Frost & Sullivan, the Company ranked the third in terms of revenue among the service providers in the telecom and datacom connectivity product distribution market in the PRC in 2019, with a market share of approximately 4.4%.

This press release is issued by DLK Advisory Limited on behalf of Pangaea Connectivity Technology Limited.

For enquiries, please contact: DLK Advisory Michelle Shi ([e-mail]) Skye Shum ([e-mail]) Kathleen Mui ([e-mail]) Ivy Cheung ([e-mail]) Tel: [phone] Fax: [phone]

Pangaea Connectivity Technology Limited

Global Offering Details:

Number of Offer Shares under the Share 250,000,000 Shares Offer :

(subject to the Over-allotment Option)

25,000,000 Shares Number of Public Offer Shares :

(subject to reallocation)

225,000,000 Shares (including 25,000,000 Number of Placing Shares : Employee Reserved Shares)

(subject to Over-allotment Option and reallocation) Offer Price : HKUSD0.52 - HKUSD0.58 per Offer Share Board Lot : 4,000 Shares

HKUSD2,343.38 Maximum Price per Board Lot :

(inclusive of brokerage, Stock Exchange trading fee and SFC transaction

levy) Public Offer Begins : 09:00 a.m., 30 January 2021 (Saturday) Public Offer Ends : 12:00 noon, 4 February 2021 (Thursday) Expected Price Determination Date : 5 February 2021 (Friday) Expected Listing Date : 19 February 2021 (Friday) Stock Code : 1473.HK

Use of Proceeds:

Assuming (1) an Offer Price of HKUSD0.55 per Share, being the mid-point of the indicative Offer Price range HKUSD0.52 to HKUSD0.58 per Share, and (2) that the Over-Allotment Option is not exercised, the net proceeds from the Global Offering are estimated to be approximately HKUSD88.4 million after deducting underwriting commission and other expenses payable by the Group in connection with the Listing.

- Continued on next page - The Group intends to apply such net proceeds as follows (base on mid and other price):

Net

Proceeds Percentage of the Net P Intended Application roceeds (%)

(HKUSD

million) Strengthen design and technical capabilities 58.0 65.6% Broaden customer base by expanding the geographic reach of sales and technical 14.4 16.3% support coverage Strengthen back office operational supports 7.2 8.2% General working capital 8.8 9.9%

Track Record:

The Group's financial summary for the financial year ended 31 March 2018, 2019, 2020 and four months ended 31 July 2020 is as follows:

Year ended 31 March Four months ended 31 July



2018 2019 2020 2019 2020 Revenue (HKUSD'000) 843,123 871,336 970,866 277,970 758,543 Gross Profit (HKUSD'000) 115,989 136,659 165,562 49,557 92,772 Profit for the Year/Period (HKUSD'000) 34,946 27,648 33,448 3,726 42,440 Net Profit Margin (%) 4.1 3.2 3.4 1.3 5.6

- End - File: Pangaea Connectivity Technology Limited Propose to be Listed on the Main Board of the Stock Exchange of Hong Kong

29/01/2021 Dissemination of a Financial Press Release, transmitted by EQS Group. The issuer is solely responsible for the content of this announcement. Media archive at www.todayir.com

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