KrASIA Weekly Roundup: 2018, Chinese Companies in IPO Rush

Hi there,

2018 appears to be a rosy year for Chinese internet startups, as since the beginning of the year, we’ve heard quite a slew of IPO or quasi-IPO news.

Huami, a wearable portfolio company from the Xiaomi ecosystem, led the IPO legion to float on the NASDAQ in early Feb., one step ahead of its parent Xiaomi, which was also reportedly planning to get listed in what might be the world’s largest tech float this year.

Xiaomi’s revenue and especially profit figure have always been behind the veil. Well for the first time, according to a fund-raising file obtained by a local self-media, we could finally take a peek into its balance sheet. The Beijing-based smart devices maker –as the document says – made RMB 7.6 billion in profit in 2017, a huge jump from the previous year’s mere 900 million.

Mr. LEI Jun, Xiaomi’s co-founder and chairman, claimed in last October that the Beijing-based company churned out more than RMB 100 billion in revenue in the first ten months of last year. And internet-related services accounted for almost 70% of its total revenue.

According to what we heard on the market, many U.S.-based fund managers are only willing to shell out for Xiaomi shares when they deem that Xiaomi is an internet services provider in the disguise of hardware maker. At the end of the day, selling hardware is a low-profit-margin and less attractive business.

In 2016, 79% of Xiaomi’s revenue came from hardware business on a profit margin of just 2.8%, whilst the profit margin for internet services, accounting for only 21% of total revenue the same year, stands at upwards of 40%.

Enough with Xiaomi.

Alibaba’s Ant Financial, Tencent-backed Didi Chuxing, Bytedance, were also widely-tipped to go public sometime somewhere this year.

And not just the big guys, smaller ones with lower valuation, seeking to seize the market sentiment and new window, are also mulling over a possible float.

In the OTA sector, Tencent- and Ctrip-backed Tongcheng was looking to raise between USD 1 billion and 1.5 billion in Hong Kong in the second half of this year.

Online streaming-wise, Baidu’s iQiyi and Bilibili, also filed with SEC to list in the U.S.

Qu Toutiao, which operates a service that is very similar to what Bytedance’s Jinri Toutiao offers, just raised a USD 100 million Pre-IPO round from Tencent.

Bytedance is one of the few Chinese internet companies that hasn’t sided with BAT yet.

Douyu and Huya, two of the most popular Chinese games live streaming businesses, were also considering a listing place between Hong Kong and the U.S. Since both companies were backed by Tencent, China’s largest social networking and gaming giant, the space for other players in the local games streaming sector would be very limited.

Below are this week’s stories and ideas you shouldn’t miss, see you next week.

CHINA

Southeast Asia

Noteworthy Startups

Writer: Ben Jiang