CSMall Group Announces Proposed Listing on the Main Board of the Hong Kong Stock Exchange

CSMall Group plans to offer 194,183,990 shares (subject to the Over-allotment Option), of which 174,763,990 shares will be international offer shares (subject to adjustment and the Over-allotment Option), representing approximately 90% of the initial offer shares; the remaining 19,420,000 shares will be Hong Kong public offer shares (subject to adjustment), representing approximately 10% of the initial offer shares. Offer price is set between HK$2.28 to HK$3.28 per share. The Hong Kong Public Offering will start at 9 a.m., 28 February 2018 (Wednesday), and close at 12:00 noon, 5 March 2018 (Monday). Dealings in shares on the Main Board of the Hong Kong Stock Exchange is expected to commence at 9:00 a.m. on 13 March 2018 (Tuesday). The shares will be traded in board lot of 1,000 shares each. The Company's stock code will be 1815.

China Merchants Securities (HK) Co., Ltd. is the Sole Sponsor, Sole Global Coordinator and Sole Bookrunner.

The Group sells a wide selection of authentic and quality jewellery products through the platform brand of "CSmall". According to the Frost & Sullivan Report, the Group ranked first among online jewellery retailers and integrated online and offline jewellery retailers in China in terms of sales revenue in 2016. They offer customers convenient online and offline shopping access with offline jewellery fitting and maintenance services, thereby improving customers' shopping experience. The Group has also launched CSmall Gift initiatives, through which it cooperates with CSmall Gift partners, which are non-jewellery retailers and service providers. The Group believes that the CSmall Gift initiatives not only tap into the established customer traffic of its CSmall Gift partners and transform it into sales volumes, but also promote the sales of CSmall Gift partners and form a "win-win" situation.

From 2014 to 2017, the performance of CSMall Group grew rapidly with revenue and net profit both grew by more than ten times. The revenue of the Group increased from approximately RMB290 million in 2014 to RMB3.15 billion for the first ten months of 2017. Its net profit also increased from RMB9.67 million in 2014 to approximately RMB97 million in 2017E (Annual net profit exceeds RMB110 million if the impact of listing expenses is excluded). The growth trend of the Group is expected to continue in the future.

CSMall Group has successfully implemented the New Jewellery Retail Model, which integrates four complementary elements, namely, its comprehensive e-commerce platform, its easily accessible offline sales and service network, its data mining and utilization capabilities, and innovative crossover marketing initiatives. The interaction between the online sales channels and offline sales and service network helps to expand customer reach by driving customer traffic to each other. Leveraging on extensive customer reach, it utilises data analytics to understand customer needs and preferences, and apply them in targeted sales as well as marketing initiatives and product designs and development, so as to stay ahead of trend and the retail market.

Mr. CHEN He, Chairman, Executive Director and Co-CEO of CSMall Group Limited, said, "In the past few years, with the rapid economic growth in China as well as the continually enhanced per person consumption power in the Mainland, the jewellery retail market in China has seen a robust development. Consumers' growing demand for diversified designs and brand value, the government's strong support for "Internet Plus" initiatives and the development of the mobile Internet industry have contributed to industry growth. In addition, consumers' pursuit for comprehensive shopping experience and the growing influence of the China's younger generation who are becoming a leading consumer group of jewellery products have led to the rapid growth of the China's integrated online and offline jewellery retail market. With our leading market position and long-term innovative growth strategy, CSMall Group will be able to capture these opportunties, satisfy unmet demand of consumers, and explore new business opportunities and markets."

As the largest integrated online and offline jewelry retailer in China, CSMall Group's online sales channels and offline retail and service network complement, support and promote each other, and the synergies resulting therefrom contribute to the expansion of its customer base and the growth of its business. The potential growth in the online jewellery retail market is huge, and the market prospects for affordable jewellery products in China is also extensive. The Group's leading market position and extensive customer reach have well positioned it to further expand the volume, width and depth of sources of customer data to generate comprehensive data analytics to support and enhance the business of the Group. In addition, its diversified and innovative sales and marketing initiatives that are designed to differentiate from traditional jewellery retailers have substantially contributed to the growth of its business, such as the multi-brand sales strategy, cooperation with third-party online sales channels and offline retail point, online flash sales launched on self-operated online jewelry platform, and the CSmall Gift crossover sales and marketing initiatives.

The authenticity and quality of its jewellery products have been critical to its success to date. The Group provides customers with authentication certificates issued by jewellery quality inspection centres that are approved by AQSIQ. Apart from that, the Group also guarantees customers that a penalty payment of up to ten times the purchase price for its jewellery products if an AQSIQ-approved jewellery quality inspection centre certifies such products to be inauthentic or defective. The Group has now developed market recognition for its trustworthy product quality. The management team of the Company comprises executives with extensive and diversified industry experience and strong execution capabilities, and they would always lead the Group to grow. The co-founders and management team are committed to building a corporate culture dedicated to the pursuit of excellence and long-term commitment.

Mr. CHEN He concluded, "The application of Internet technology and big data is a general trend of global economic development. In line with this trend, CSMall Group will continue to play a pioneering and innovative role in the jewellery retail market of China, and maintain and consolidate our position as a leading integrated online and offline 'New Jewellery Retail Model' Internet-based jewellery retailer in China. With support from the market, after the listing, the Group will expand and optimise our integrated online and offline retail structure and enhance the online and offline synergies, including the implementation of our CSmall Gift initiatives and other crossover marketing initiatives, and the development of our online sales channels and offline sales and service network. We will also fully strengthen our data collection, mining and utilisation capabilities by upgrading our IT infrastructure and data management systems, expanding our data analysis team and enhancing our software development capabilities. In addition, we will improve our product design and development capabilities and enhance our inventory, order fulfilment and logistics management by expanding our in-house design team and expanding our warehouse and upgrading our order fulfilment facilities commensurate with the business needs. We will continue to pay attention to our brand development and targeted sales and marketing campaigns, so as to seize every opportunity for further development. CSMall Group is ready to make full use of Hong Kong's unique financing platform to create the greatest value for its shareholders."

Fact Sheet

Information on the Shares Offering :Number of Offer Shares: 194,183,990 Shares (subject to the Over-allotment Option )Number of Hong Kong Offer Shares: 19,420,000 Shares (subject to adjustment)Number of International Offer Shares: 174,763,990 Shares (subject to adjustment and the Over-allotment OptionMaximum Offer Price: HK$3.28 per Share (excluding brokerage, SFC transaction levy and Stock Exchange trading fee)Board Lot: 1,000 SharesOffer Price per Share: HK$2.28 to HK$3.28 per ShareStart of the Hong Kong Public Offering: 9 a.m., 28 February 2018 (Wednesday)End of the Hong Kong Public Offering: 12:00 noon, 5 March 2018 (Monday)Expected Price Determination Date: 5 March 2018 (Monday)Announcement of Allotment Results: 12 March 2018 (Monday)Expected Listing Date: 13 March 2018 (Tuesday)Stock Code: 1815

Use of ProceedsAssuming that the Over-allotment Option is not exercised, and that the Offer Price is at HK$2.78 (being the mid-point of the Offer Price range), the aggregate net proceeds from the Share Offer will be approximately HK$481.5 million, after deduction of underwriting fees and commissions and estimated expenses in connection with the Global Offering. The Company intends to apply the net proceeds in the following manner:

Intended Use of Proceeds / Amount(HK$ million) / As a Percentage ofTotal Amount (%)For expanding and optimise integrated online and offline retail structure and enhance the online and offline synergies. / 313.0 / 65%- CSmall Gift initiatives and other crossover marketing initiatives / 192.6 / 40%- develop our online sales channels / 72.2 / 15%- develop our offline sales and service network / 48.1 / 10%For strengthening data collection, mining and utilisation capabilities, primarily by upgrading our IT infrastructure and data management systems, expanding our data analysis team and enhancing our software development capabilities. / 48.1 / 10%For improving product design and development capabilities and enhancing inventory, order fulfilment and logistics management, primarily by expanding in-house design team and expanding warehouse and upgrading order fulfilment facilities commensurate with the business needs. / 48.1 / 10%For brand development and targeted sales and marketing campaigns / 48.1 / 10%For working capital and other general corporate purposes / 24.1 / 5%

Summary Financial Information of the Listing Segment :

Between January 2014 and March 2016 (the "Relevant Period"), the Group's cost of silver only reflected the historical cost of production of silver ingots incurred by Longtianyong, a wholly owned subsidiary of the Group's controlling shareholder, China Silver Group. The production cost was lower than the cost of procuring silver ingots at their then prevailing market rates. In order to provide investors with a meaningful measure of the overall profit generating capabilities of the Group's business during the track record period and after the listing, the Group adopted the concept of the listing segment as its sole reporting segment during the track record period to account for the cost of silver ingots based on their then prevailing market rates during the Relevant Period.

Issued by Porda Havas International Finance Communications Group for and on behalf of CSMall Group Limited. For further information, please contact:

Porda Havas International Finance Communications GroupKelly Fung +852 3150 6763 [email protected]Alex Wang +852 3120 6522 [email protected]Mandy Leung +852 3150 6732 [email protected]Nicole Weng +852 3150 6742 [email protected]Mila So +852 3150 6726 mila.so @pordahavas.comBlanca Zhao +852 3150 6752 [email protected]Fax: +852 3150 6728^{[1][2][3][4][5]}

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