Modern Chinese Medicine Group Co., Ltd. announces its subscription results

Modern Chinese Medicine Group Co., Ltd., which principally engages in the production of proprietary Chinese medicine and offers both over-the-counter and prescribed medicines intended for use by the Middle-aged and the Elderly in the PRC, announced the subscription results for its Offer shares under the Hong Kong, S.A.R., China Public Offering and International Placing. The Offer Shares under the Hong Kong, S.A.R., China Public Offering have been over-subscribed by approximately 30.66 times. The Offer Price has been set at HK$1.18 per Offer Share. Dealings in the Shares on the Main Board of The Stock Exchange of Hong Kong, S.A.R., China Limited is expected to commence on 15 January 2021 (Friday).

Due to moderately over-subscription in the Hong Kong, S.A.R., China Pubic Offering Shares, the re-allocation procedures have been applied. A total number of 30,000,000 International Placing Shares have been reallocated from the International Placing to the Hong Kong, S.A.R., China Public Offering. As a result of such reallocation, the final number of Offer Shares allocated to the Hong Kong, S.A.R., China Pubic Offering Shares is 45,000,000 Shares, representing 30% of the total number of Offer Shares initially available under the Global Offering. Based on the final Offer Price of HK$1.18 per Offer Share, the net proceeds from the Global Offering to be received by the Company, after deducting the underwriting fees and commissions and other estimated expenses payable by the Group in connection with the Global Offering, are estimated to be approximately HK$117.4 million.

Modern Chinese Medicine intends to use these net proceeds for the following purposes: 1) approximately 44.0% will be used for enhancing and expanding the production capacity to further produce the major prescribed medicine, in particular the major capsule products with the intended effect of treating/alleviating cardio-cerebrovascular condition; 2) approximately 16.8% will be used for broadening the distribution network in Huanan and Huadong; 3) approximately 10.2% will be used for raising the brand awareness through media marketing and promotion efforts; 4) approximately 19.9% will be used for further raising the R&D efforts, procuring quality management equipment and broadening the product portfolio; and 5) approximately 3.4% will be used for upgrading the IT system; and 6) approximately 5.7% will be used for increasing general working capital.

Soochow Securities International Capital Limited is the Sole Sponsor. Soochow Securities International Brokerage Limited and Wealth Link Securities Limited are the Joint Global Coordinators, the Joint Bookrunners and the Joint Lead Managers.

Mr. Xie Wei, Executive Director, Chairman and Controlling Shareholder of Modern Chinese Medicine Group Co., Ltd., said, "the COVID-19 pandemic had brought new business opportunities to our Group and enhanced our customers' awareness of our diversified product portfolio. Additionally, with PRC residents' growing awareness of personal health and increasing government policies supports, the PCM market is expected to expand continuously. Listing on the Main Board of the SEHK enables the Group to further solidify its competitive strengths, and to seize opportunities of industry development."

About the Group

Modern Chinese Medicine principally engages in the production of PCM and offers both OTC and prescribed medicines intended for use by the Middle-aged and the Elderly in the PRC. According to the Euromonitor Report, the Group was one of the leading non-listed companies engaged in the production of PCM in 2019 in terms of the sales of Qi-deficiency and blood-stasis PCM pills and cardio-cerebrovascular PCM capsules in Northeast, the PRC.

As at 21 December 2020, the Group had 59 types of PCM products and had established a distribution network of 77 distributors that covers 39 cities in the PRC. For the year ended 31 December 2017, 2018, 2019 and 9 months ended 30 September 2020, the Group's revenue was approximately RMB106.5 million, RMB173.5 million, RMB218.8 million and RMB218.8 million, respectively.