GMT EIGHT - New Share

Interpreting the new US stock market | Behind the significant reduction in fundraising amount, the continuous expansion of losses for Soft Cloud Technology (RYET.US)

Soft Cloud Technology RYET.US) Going Public in the US May Face Cold Reception. In the latest version of the F-1/A filing submitted on December 9, Soft Cloud Technology said it will issue 3.75 million shares at a price between $4-5 per share, raising $15-18.75 million. In the F-1 filing submitted to the SEC on December 29, 2023, Soft Cloud Technology stated that it will issue 5 million common shares at a price of $5-6 per share, raising $25-30 million. Clearly, the revised issuance plan in the latest version has reduced the number of shares issued and the price from the initial plan, resulting in a significant reduction in the fundraising scale, which is often a result of a lack of market enthusiasm for the company going public. This may be related to Soft Cloud Technology's poor performance. As a provider of AI learning software focused on China's K12 education, Soft Cloud Technology's revenue for fiscal years 2021-2024 (12 months ending March 31) was $11.4994 million, $12.8031 million, $9.1329 million, and $9.154 million, respectively. The net profit for the same period was $0.4724 million, -$0.7395 million, -$1.2426 million, and -$2.1041 million. It is evident that over the past four years, Soft Cloud Technology's revenue has declined overall, and the losses have increased significantly after a turn from profit to loss. Smart Homework Learning Platform has approximately 230,000 monthly active users Since its establishment in 2012, Soft Cloud Technology has focused on the K-12 education sector in China. It has introduced AI technology into schools, aiming to reform traditional education and learning methods in China, providing new teaching, learning, and assessment methods for schools, teachers, and students in the AI era to enhance efficiency and reduce the burden of modern education. As of now, Soft Cloud Technology has two main product lines, SmartExam Solution (intelligent exam) and SmartHomework Solution (intelligent homework). The SmartExam solution refers to creating computer room exams for degree-level exams for clients. This business has two main sources of revenue, including the development and implementation of the SmartExam platform, as well as comprehensive professional exam services that include software customization, hardware sales, and other services. Soft Cloud Technology's SmartExam solution has provided academic exam services for the subject of biology since 2013 and expanded to all 11 assessment subjects in 2017, covering exam content, scoring and evaluation, on-site management, training and supervision, and standard security. The SmartHomework solution refers to providing personalized learning solutions for students to help them study more effectively, allowing teachers to adjust guidance based on specific students' needs. In terms of revenue structure, Soft Cloud Technology's SmartHomework solution has developed a diversified monetization model, including platform development, software customization and content development, licensing services, personalized exercise books, MOTK Pro, and digital services in various categories. Platform development involves creating digital teaching platforms, including AI study rooms, for clients to distribute, submit, correct, and analyze homework in a completely online and digital manner, greatly reducing the burden on teachers and improving student performance accurately. Software customization and content development involve designing, developing, and installing customized software for clients and developing educational content for them. This is a new product line launched by Soft Cloud Technology in 2022. Licensing services involve Soft Cloud Technology licensing its exercise question bank to schools or educational companies and charging monthly or annual fees for it. Personalized exercise books and MOTK Pro are VIP services introduced by Soft Cloud Technology in its system for students. These two services cover all subjects from grades 4 to 12, and students pay a subscription fee to enjoy these services, which sets them apart from the free services for students. Digital services involve converting publishers' publications into digital format and charging service fees for it. According to the prospectus, Soft Cloud Technology's online academic exercise question bank within the SmartHomework solution has accumulated over 10 billion test data as of now. These data come from approximately 16,700 schools (13,400 schools in Jiangxi Province and over 3,300 schools in other provinces) and about 15.1 million user-generated data. With the continuous upgrade of online learning data and AI algorithms, Soft Cloud Technology's internal evaluation accuracy for providing tailored effective learning strategies to students has reached 97%. As of March 31, 2024, Soft Cloud Technology had approximately 20,177 paying premium subscribers and a total of about 80,452 subscribers. There were approximately 329,092 monthly active users. The company is establishing and deepening strategic business alliances with large national publishers, China Mobile Limited, and other companies with vast customer resources to acquire new paying subscribers. As of September 30, 2024, over 15.1 million K-12 students were using Soft Cloud Technology's online SmartHomework learning platform, with approximately 230,000 being monthly active users. Losses Continue to Increase due to Accelerated Expansion in the B-side Soft Cloud Technology's overall revenue has been declining since fiscal year 2021, which is somewhat related to the Double Reduction policy implemented in the education industry on July 24, 2021. This policy caused numerous educational institutions to close or transform, resulting in significantly reduced customer demand. As a result, Soft Cloud Technology's two main product lines experienced a slight shrink in business scale in fiscal year 2023, with total revenue falling by 28.66% to $9.1329 million. In fact, with reduced market demand and increased competition, Soft Cloud Technology's SmartExam solution business is struggling. The proportion of this business in the company's total revenue decreased from 20.3% in fiscal year 2021 to 6.3% in fiscal year 2024, and the corresponding revenue decreased from $2.34 million to $0.5758 million. Based on market conditions, Soft Cloud Technology adjusted its marketing strategy to focus more on the SmartHomework solution. In terms of effectiveness, Soft Cloud Technology's SmartHomework solution in fiscal year 2024 has shown signs of growth, with increased revenue compared to the previous year. The company is optimistic about the future potential of this product line and plans to continue developing and expanding it in the coming years.Although the income has not returned to the level of the 2021 and 2022 fiscal years, it has increased by 14% compared to the 2023 fiscal year, indicating that the smart homework solution business may have reached its bottom.However, upon detailed analysis, it is not difficult to find that in recent years, the revenue structure of Winox Technologies' smart homework solution business has undergone significant changes. In the 2021 fiscal year, the major sources of revenue in the smart homework solution are digital services, personalized exercise books, and MOTK Pro services, which account for 44.1% and 16.8% of the total revenue respectively. These are the two core businesses in the smart homework solution, while the revenue from platform development accounts for 10.9% and licensing revenue accounts for 7.9%. By the 2024 fiscal year, the core businesses of Winox Technologies' smart homework solution are digital services and platform development services, which account for 57.6% and 34.3% of the total company revenue respectively. The revenue from personalized exercise books and MOTK Pro services now only accounts for 1%, a significant decrease from the 16.8% in the 2021 fiscal year. This is mainly due to new policies implemented from the 2022 fiscal year onwards that restrict the company's distribution capabilities, which hindered the sales of products and services aimed at consumers. In response to this situation, Winox Technologies has redeployed its smart homework solution services. The company has not only built a new distribution model for personalized exercise books and MOTK Pro services through telecommunications operators to ensure the continued operation of consumer-end businesses, but has also increased its focus on developing business-to-business services such as platform development, software customization, and content development to ensure the steady growth of the smart homework solution. Thanks to the continuous efforts in the business-to-business sector, the revenue from the smart homework solution services grew by 14% in the 2024 fiscal year. However, while adjusting the business structure to achieve revenue growth in the smart homework solution services, there have been some "side effects." Specifically, the significant increase in sales and marketing expenses when developing business-to-business customers has led to a noticeable increase in the proportion of total operating expenses, which has affected the company's overall profitability. This is a key reason for the increasing losses in Winox Technologies' profit from a profit in the 2022 fiscal year to a larger loss. According to the prospectus, in the 2021 fiscal year, Winox Technologies' total operating expenses accounted for only 33.7% of the revenue, but in the 2022-2024 fiscal years, the proportion of total operating expenses to total revenue increased to 50%, 51%, and 55%, showing a continuous upward trend. Looking closer, the fastest growing component of total operating expenses is sales and marketing expenses, which accounted for 12.9%, 17.1%, 27.4%, and 25.9% of the total revenue in the 2021-2024 fiscal years respectively, significantly impacting the company's profitability level. Therefore, it is not surprising that Winox Technologies has lowered its fundraising target, as various potential operational challenges pose a concern to its fundamentals. The smart exam solution continues to be weak in a backdrop of reduced market demand and intensified competition, and although the company has increased its efforts in expanding the smart homework solution business to achieve growth, consumer-end products have not shown a stabilizing trend yet, and the continuous development of business-to-business has affected the company's profitability and increased losses. Winox Technologies will need to demonstrate better performance in the future to prove its strength.

17/12/2024

Preview of US IPOs: consecutive setbacks in listing, is the IPO story of Yipin Chicken Hotpot "not too fragrant"?

In recent days, The Great Restaurant Development Holdings Limited from Hong Kong (referred to as "One Pot Chicken Hot Pot") has publicly disclosed its prospectus for an IPO on the NASDAQ in the United States. Previously, the company had filed confidentially with the SEC on September 15, 2023. The bumpy journey to the IPO of One Pot Chicken Hot Pot can be traced back to 2019 when it submitted an application for a main board listing on the Hong Kong Stock Exchange under the name "One Pot Development". Since then, it has updated its prospectus several times but has been unable to successfully list in Hong Kong. Now, this Hong Kong restaurant brand has chosen to list on the US stock market. Whether it will succeed in its goal and attract investors to vote with real money remains to be seen. Declining revenue raises doubts about continued operations According to public information, One Pot Chicken Hot Pot is a Hong Kong-based Chinese chain restaurant brand specializing in various types of chicken hot pot. Since opening its first hot pot restaurant in Tsuen Wan in 2011, the company currently operates 7 restaurants in Hong Kong, covering commercial areas (such as Mong Kok and Causeway Bay) and residential areas (Tsuen Wan, Hung Hom, and To Kwa Wan). In 2022, 2023, and the first half of 2024, the company's revenues were $13.0087 million, $20.4834 million, and $8.3356 million respectively, with corresponding net profits of $0.476 million, $3.4165 million, and $0.4439 million. In the first half of 2024, the company's operating income fell by nearly 20% year-on-year, mainly due to: (i) economic instability affecting market sentiment, leading consumers to be more cautious in their daily spending; and (ii) customers choosing outbound tourism, including (a) China, which provided affordable dining options; (b) Japan has always been one of Hong Kong residents' favorite holiday destinations, especially during this period when the yen depreciated against the dollar. At the same time, the company's gross profit margin also decreased from approximately 26.7% in the first half of 2023 to about 16.1% in the first half of 2024, mainly due to rising inflation affecting food prices and labor costs. However, while revenue has shrunk, operating expenses have generally increased. It is understood that in the same period last year and in the first half of 2024, the company's sales and marketing expenses were approximately $22,000 and $42,000 respectively, accounting for 0.2% and 0.5% of total revenue; and general and administrative expenses were approximately $100,000 and $200,000 respectively, accounting for 0.9% and 2.5% of total revenue in the same period. In fact, the company had filed with the Hong Kong Stock Exchange as early as 2019. According to the prospectus disclosed at that time, the company's revenues for the years 2016 to 2018 were HK$146 million, HK$165 million, and HK$174 million respectively. Converted at the current exchange rate (approximately 7.27), the company's revenue in 2022 and 2023 were approximately 94.66 million yuan and 149 million yuan, indicating that in recent years, the company's revenue has not only not shown significant growth but has also experienced a slight decrease. The company admitted in the prospectus that due to operating losses, there are doubts about its continued operating capacity. As of June 30, 2024, December 31, 2022, and 2023, the company's operating capital deficits were $3.183 million, $3.92 million, and $2.201 million respectively, and the operating cash flows generated were -$0.5868 million, $1.6045 million, and $4.1462 million respectively. Weak performance of the Hong Kong catering market According to the prospectus, the Hong Kong catering market has been severely affected due to factors such as the pandemic and social distancing measures, with the overall market size of the catering industry in Hong Kong decreasing by about 29.4% from 2019 to 2020. Since 2023, local demand has rebounded, and the recovery of the tourism industry has driven the recovery of the catering industry in Hong Kong, with the market size expected to reach HK$109.5 billion in 2023. Looking ahead, the overall market size of the catering industry in Hong Kong is expected to increase at a compound annual growth rate of approximately 4.3% from 2024 to 2028. It can be seen that the growth rate of the local catering market in Hong Kong has slowed down and is approaching saturation, and the particularly high operating costs have also caused local catering enterprises in Hong Kong to face a crisis of declining profits. Looking at the performance of the catering industry in 2024, although the impact of the pandemic has subsided, the situation of the local catering market in Hong Kong remains bleak. Factors such as Hong Kong residents spending more on the mainland, local residents becoming more cautious in their spending, and changes in spending patterns of tourists to Hong Kong have led to a general decline in the performance of the local catering industry. According to the interim financial reports disclosed by several Hong Kong local catering listed companies, CAFE DE CORAL H (00341) saw a 1.2% year-on-year decrease in revenue in the first half of the year, while its net profit attributable to shareholders fell by a substantial 28.2%, marking the first decline in mid-year revenue since the 2021 fiscal year during the pandemic period; FAIRWOOD HOLD (00052) saw a decrease of 57.26% in profit attributable to shareholders, almost halving; TAM JAI INTL (02217) saw a 55.8% decline in interim profit, to HK$36.068 million. Under difficult circumstances, many companies have chosen to expand into the mainland out of necessity. CAFE DE CORAL H has expanded its network of stores in the Greater Bay Area, and the company now has more stores in mainland China than the fast-food restaurant chain in Hong Kong; Tsui Wah had up to 43 restaurants at one point in the mainland market; as of August 24, TAI HING GROUP's Caf de Coral Ice Room had 28 stores in mainland China. In contrast, One Pot Chicken Hot Pot has not expanded into the mainland, and there has been no progress in its plans to open new stores in Hong Kong. As early as 2020, the company stated that it planned to open five new restaurants in residential areas of Hong Kong in the three years ending December 31, 2023, and then open six hot pot restaurants every six months thereafter. However, as of the latest disclosure date, the number of restaurants under the company has remained unchanged from 2018. Can dreams come true by listing in the US after abandoning Hong Kong? Due to policy and institutional restrictions, it may be difficult for Hong Kong-listed catering companies to achieve sustainable growth. Migration to overseas markets, especially the US, may become a new strategic choice for these companies. With the rise of the Chinese economy and global capital markets, listing in the US may bring more possibilities for these catering companies to obtain new financing and development opportunities. The decision to list in the US by One Pot Chicken Hot Pot is also a strategic adjustment made in response to the difficult business environment in Hong Kong. Whether this move can help the company turn its fortunes around and attract investors remains uncertain. It will depend on how well the company can seize the opportunities in the US market, adapt to the local operating environment, and provide potential investors with confidence and growth prospects.Due to various factors, such as the US stock market and other overseas markets, have become the preferred choice for many companies to list.It is understood that the listing conditions for US stocks are relatively relaxed, and the requirements of the NYSE and Nasdaq for companies preparing to go public are not as strict as those of the Hong Kong stock exchange and A-shares. At the same time, as an international market, the US stock market also has higher appeal for funds. For some companies with financing needs or seeking to expand overseas business, choosing to list overseas can help broaden financing channels and enhance the company's international competitiveness and brand influence. Data shows that in the first half of this year, a total of 29 Chinese concept stocks went public in the US, including 24 IPOs which raised a total of approximately $1.95 billion, and 4 SPAC listings, and 1 transfer listing. However, it should be noted that One Chicken Hot Pot does not belong to the favored industries of US stock investors such as the internet and technology, and as a business limited to Hong Kong, if One Chicken Hot Pot chooses to list in Hong Kong, it is naturally more likely to be accepted by local investors. Choosing to go to the US instead of Hong Kong may also be a last resort for the company after attempts to list in Hong Kong failed. However, going public in the US is not a smooth journey. According to data from Huayi Xin Capital, the average amount raised by Chinese concept stock IPOs in the first half of this year was relatively low, with an average fundraising amount of $81 million. There were only 2 companies that raised more than $100 million, while 19 companies raised less than $10 million, accounting for 79%. In addition, 3 companies raised only $5 million; Looking at the financial situation in the year before the listing, only 7 companies had revenue of over $100 million in the past year, while 8 companies had revenue lower than $10 million, accounting for 27.5%. Most companies had revenue concentrated between $10 million and $100 million. At the same time, more than half of the Chinese concept stocks experienced a drop in stock price on the first day of listing, such as the Hong Kong-based caviar supplier, Fu Yuan Group (TWG.US), which dropped 51.50% on the first day, and the carbon toner cartridge manufacturer and seller, StarMap International (YIBO.US), which dropped 30.25% on the first day. It can be seen that as Chinese concept stocks are listing in the US, most listed companies are still low in revenue and small in scale, and their stock price performance after listing is not optimistic. The combination of poor fundamentals and stagnant store expansion may make the path to listing in the US for One Chicken Hot Pot not so simple.

14/12/2024

The fastest way to obtain a tea-colored visa is to go to the US for an IPO next year.

According to reports cited by informed sources, Hunan Tea Yuet Cultural Industry Development Group Co., Ltd. (known as "Tea Yan Yue Se") is considering conducting its initial public offering (IPO) on the U.S. stock market instead of Hong Kong. Informed sources indicate that the sale of stocks for the leading Chinese tea drink leader Tea Yan Yue Se may take place in the U.S. market as early as next year. Moreover, this tea chain still needs approval from Chinese regulatory authorities before it can list overseas. Earlier news reports had indicated that this Chinese tea chain had selected CICC and Morgan Stanley earlier this year to participate in its Hong Kong stock issuance, with the possibility of raising hundreds of millions of dollars. According to the latest media reports, informed sources suggest that Tea Yan Yue Se may conduct its IPO in the U.S. next year, but the specific timetable depends on when Tea Yan Yue Se will officially obtain approval from Chinese regulatory authorities. As the information has not yet been made public, the informed sources requested anonymity. They stated that as Tea Yan Yue Se plans to list in the U.S., more and more Chinese tea drink companies are still considering listing on the Hong Kong stock market. The representatives of Tea Yan Yue Se declined to comment on the news. Several Chinese tea chain enterprises, including Mi Xue Bing Cheng and Auntie in Shanghai, have had their offshore listing plans shelved after failing to obtain approval from the China Securities Regulatory Commission, and the sharp drop in the stock prices of some tea beverage companies in the Hong Kong stock market has dampened market sentiment towards Chinese tea beverage companies. However, the China Securities Regulatory Commission has approved the IPO of Ancient Tea in Hong Kong. Offshore listings, including in the U.S. stock market, have less stringent requirements, making them more attractive as stock trading venues for Chinese companies. Funds raised through initial public offerings on the Hong Kong stock market this year amounted to approximately $10.5 billion, a significant increase compared to 2023, but lower than the historical average level.

13/12/2024

Former CFO of McDonald's China joins the company Ba Wang Cha Ji, plans to accelerate the listing process.

According to media reports, Huang Hongfei, the former chief financial officer (CFO) of McDonald's China, will join the mainland tea drink store, Dabawang Tea Ji. Analysts pointed out that this means the listing process of Dabawang Tea Ji is expected to accelerate. On October 14th of this year, Huang Hongfei left McDonald's China and will join Dabawang Tea Ji after a short break. The report also pointed out that the founder of Dabawang Tea Ji, Zhang Junjie, is currently undergoing a round of "upgrading of the executive team" to upgrade the future store operation mode, supply chain, digital system, etc. of Dabawang Tea Ji. As early as April of this year, media reports stated that Dabawang Tea Ji was preparing to go public in the United States, and there may be significant progress in the second half of the year. The expected fundraising scale for this time is between $200 million and $300 million, and it will be responsible for listing matters by CitiGroup and Morgan Stanley. Huang Hongfei's personal information shows that he joined McDonald's (Guangzhou) in 1996 and was transferred to vice president and general manager of Central China of McDonald's China in 2010, responsible for all business in Central China including new store development, operations, and market management. The Dabawang Tea Ji brand was founded in June 2017. By 2023, Dabawang Tea Ji experienced explosive growth, opening over 2300 new stores within the year, averaging 6 new stores opened every day. With 2300 new stores, it is three times the total number of stores in the past five years. After the store opening surge in 2023, by May 2024, the total number of stores worldwide reached 4092. Dabawang Tea Ji has undergone several rounds of financing, with investors including XVC, Fosun, Fosun Rui Zheng Capital, Cong Bi Qiu Shi, among others. According to the Dabawang Tea Ji website, in addition to many cities in mainland China, stores have been opened in Malaysia, Thailand, and Singapore, exceeding 4500 globally, selling over 1 billion cups a year. The Hong Kong store opened at K11 in Tsim Sha Tsui in September.

13/12/2024

Software startup company ServiceTitan (TTAN.US) soared 42% on its IPO debut, marking the best debut since March of this year.

Residential and commercial maintenance software company ServiceTitan (TTAN.US) went public on the NASDAQ on December 12th, Eastern Time, raising 6.248 billion US dollars. The stock closed at $71 per share, the same as the opening price, up 42% from the $65 per share IPO price. According to data compiled by Bloomberg, this is the largest first-day gain for a US IPO since Reddit (RDDT.US) went public in March with a 48% increase from the IPO price. Prior to this, after expanding the price range, ServiceTitan set the IPO price at $65 to $67 per share for marketing. Yesterday, the company announced its IPO of 8.8 million shares with a price of $71.00 per share. In addition, underwriters have a 30-day option to purchase an additional 1.32 million shares. This transaction brought the company's market value close to $9 billion. Including stock options and restricted stock units listed in documents submitted to the US Securities and Exchange Commission (SEC), the company's fully diluted valuation is close to $10 billion. According to data provider PitchBook, the company's valuation after financing in 2022 is approximately $7.6 billion. During the boom in 2021, the company was valued as high as $9.5 billion. Bloomberg Intelligence analyst Anurag Rana said earlier this week that due to ServiceTitan's "large potential market and integrated software products," the company raised its price range, reflecting optimism about its growth potential. The software sold by ServiceTitan can integrate planning, scheduling, financing and other tasks on its business management platform. The company aims to improve efficiency in accessing construction projects and other services for residential customers and commercial contractors. "Nina Achadjian, a member of the company's board of directors and partner at investment firm Index Ventures, said, "Before ServiceTitan came along, this was a forgotten industry," "The product-market fit is incredible." In a report earlier this week, Rana wrote, "Our analysis shows that the company's annual sales growth rate over the next two years will reach 16%-18%, with the possibility of an upward revision if the small and medium-sized enterprise market rebounds." Documents show that co-founders and CEOs Ara Mahdessian and Vahe Kuzoyan will jointly control a majority of voting rights after the IPO through their holding of Class B shares. After ServiceTitan goes public, an affiliate of ICONIQ Growth is expected to hold 20.5% of Class A shares, while an affiliate of Bessemer Venture Partners will hold 11.9%, TPG Inc.'s entity will hold 7.2%, and an affiliate of Battery Ventures will hold 6.4%. ServiceTitan stated in its filing that its annual revenue for the fiscal year 2024 is estimated at around $614 million, a 31% increase year-on-year. The company reported a net loss of approximately $195 million, slightly lower than the $270 million loss in the fiscal year 2023. Goldman Sachs Group, Inc., Morgan Stanley, Wells Fargo & Company, and Citigroup led the IPO, with 10 other banks participating. The company is trading on NASDAQ under the symbol TTAN.

13/12/2024

ServiceTitan (TTAN.US) will go public tonight with an IPO pricing of $71.00 per share.

Cloud software company ServiceTitan (TTAN.US) announced its initial public offering (IPO) of 8.8 million shares priced at $71.00 per share. In addition, underwriters have a 30-day option to purchase up to an additional 1.32 million shares. The company's stock is scheduled to begin trading on the Nasdaq Global Select Market on December 12, 2024, under the ticker symbol "TTAN", with the offering expected to close on December 13, 2024. ServiceTitan provides an end-to-end cloud software platform designed specifically for service contractors in traditional industries to manage and connect various business workflows. Their services cover multiple industries including plumbing, electrical, HVAC, garage doors, pest control, and landscaping. Their customer base ranges from family-owned businesses to large chains. In the 12 months ending on July 31, 2024, ServiceTitan processed a total transaction volume of $62 billion. As of January 31, 2024, the company had approximately 8,000 active customers with annualized billings exceeding $10,000.

12/12/2024

Preview of US stock new shares | Evergreen International: Performance fluctuates greatly with sales volume, how to break the crisis in the luxury watch industry?

The luxury goods industry, as an important part of the global economy, has always been a focus of consumer and investor attention. From relevant data, it is not difficult to see that luxury goods consumption has "cooled down", with fluctuations in the "hard luxury" market. Taking watches as an example, in July 2023, the total Swiss watch export value decreased by 0.9% compared to the same period last year, with the watch category export value also falling by 1%. This is the first time in two years that the Swiss watch industry has seen a decrease in monthly export value. At a time when the industry is cooling down, Hong Kong luxury watch wholesaler Top Win International has submitted an IPO application to the U.S. Securities and Exchange Commission (SEC), planning to raise up to $13 million. The company plans to issue 2.7 million shares of stock at a price of between $4 and $6 per share, raising $13 million. Based on the midpoint of the proposed price range, Top Win International's market value will reach $124 million. Performance fluctuations indicate weakness in fundamentals Heng Rong International, from Hong Kong, is a wholesaler specializing in the trading, distribution, and retail of international luxury watch brands. The company directly or indirectly purchases luxury goods from authorized dealers, distributors, and brand owners in Europe, Japan, Singapore, and other regions, and sells them to customers, including independent watch dealers, watch distributors, and retail buyers in the watch industry. The company currently offers a selection of over 30 internationally renowned watch brands, including Blancpain, Breguet, Cartier, Chopard, Hermes, IWC, Jaeger-LeCoultre, Rolex, Omega, and Longines. The company mainly sells watches in the price range of $1,900 to $7,500, targeting middle to high-income customers. According to industry commentator and investor Danny Younis, the luxury watch secondary market is undoubtedly a "buyer's market" now, and prices for Rolex watches in the secondary market are expected to further decline. The sluggish market will also affect watch wholesalers. From the first half of 2022 to the first half of 2024, Heng Rong International's performance fluctuated significantly. In 2022, Top Win's total revenue reached $14.225 million, and by 2023, this number had significantly increased to $18.814 million. However, in the first half of 2024, revenue declined to $7.9254 million. At the same time, net profit also fluctuated, with the company achieving a net profit of $71,500 in 2022, rising substantially to $198,100 in 2023. However, in the first half of 2024, the company incurred a loss, with a negative net profit of $218,600. It is understood that Heng Rong International's revenue fluctuations are related to sales. For example, the decrease in revenue in the first half of 2024 was mainly due to a significant decline in sales by 41%, partially offset by an 18% increase in the average unit price. In addition, the company relies on a small number of customers. For example, in the first half of this year, two customers generated revenues of $1.945 million and $1.096 million, accounting for 25% and 14% of total revenue, respectively, totaling 39%. As of December 31, 2023, three customers accounted for approximately 40% of total annual revenue. The aftermath of relying on customers is evident in the financials, with a sharp increase in accounts receivable. In the first half of this year, one customer's accounts receivable accounted for 10% or more of the total balance, and 100% of the total balance. In 2023, one customer's accounts receivable accounted for 10% or more of the group's total balance, and 98% of the total balance. In 2022, three customers' accounts receivable accounted for 10% or more of the group's total balance, accounting for 46%, 20%, and 11% of the total balance, respectively. If the company encounters significant delays or defaults in payments from customers, its cash flow, liquidity, and financial position may be significantly affected. The crisis in the luxury watch industry is emerging How to overcome it? Johann Rupert, chairman of the Richemont Group, which owns luxury watch and jewelry brands such as Cartier, Vacheron Constantin, IWC Schaffhausen, Jaeger-LeCoultre, and Van Cleef & Arpels, recently issued a warning about the issues facing the global luxury watch industry. At the Richemont annual shareholders' meeting, Rupert emphasized that the high demand for luxury watches has gradually weakened globally; he pointed out that weak sales in mainland China and Hong Kong are the group's main concerns and suggested that watchmakers reduce production to adapt to the sluggish market. The financial situation of the Richemont Group also highlights the serious current situation facing the luxury watch industry. Aligning with the global trend of the Swiss watch industry, Richemont Group's sales in the first quarter of 2024 increased by only 1% at fixed exchange rates, while sales in the Asia-Pacific region fell by 18%. More alarmingly, sales in the Greater China region plummeted by 27%. Richemont Group is not the only company facing difficulties. The entire Swiss watch industry is struggling to cope with the decrease in exports to mainland China and Hong Kong, as well as the subdued demand resulting from high youth unemployment, a sluggish real estate market, and generally low consumer confidence. At the end of the month, luxury brand Herms, which focuses on ultra-high spending consumers, also released its financial report for the third quarter of 2024, showing an 18% decline in its watch department, becoming the only department with negative growth. From 2020 to 2023, Hong Kong was respectively the largest Swiss watch import destination in Asia and globally and the second largest Swiss watch import destination, with imports totaling approximately 2.3564 billion Swiss francs, accounting for around 8.8% of the total Swiss watch exports in 2023.Located in Hong Kong, International enjoys a superior geographical position and consequently benefits from the growth dividend of luxury watches. According to Migo's data, sales of luxury watches in Hong Kong wholesale will reach $1 million by 2023, with a compound annual growth rate of approximately 1.6% during the relevant period.However, currently the luxury watch industry is facing a crisis. How will Hengrong International, as a wholesaler, "survive"? According to the prospectus, the company plans to enrich its product portfolio, expand its market share in the second-hand luxury watch market, and strengthen its retail customer base to enhance its business resilience. The prospectus reveals that Hengrong International plans to use the net proceeds from this offering for the following purposes: approximately 45% ($4.91 million) for enhancing brand awareness and implementing strategic marketing initiatives; approximately 25% ($2.73 million) for strengthening the sales team and expanding into new geographical market areas, including the Southeast Asian market; approximately 15% ($1.64 million) for establishing a more robust procurement network and acquiring a diverse range of watch products; the remaining funds will be used for supplementing operating capital and other general corporate purposes. In conclusion, amid fluctuating performance, the crisis in the luxury watch industry has emerged as a hidden concern for Hengrong International's growth. However, this listing on the US market is an important milestone for the company, as it is expected to bring in more funds and resources, enabling the company to further expand its business in the luxury watch market and enhance its brand influence.

12/12/2024

Japanese sports curriculum provider Leifras (LFS.US) sets IPO price at 4-5 US dollars per share, aiming to raise 7 million US dollars.

Leifras (LFS.US), which provides sports programs for children in Japan, filed for its initial public offering (IPO) with the Securities and Exchange Commission on Tuesday, aiming to raise up to $7 million. The Tokyo-based company plans to issue 1.6 million American Depositary Shares (ADS) at a price of $4 to $5 per share to raise $7 million. Based on the midpoint of the proposed price range, Leifras would have a market value of $119 million. Leifras' core business is children's sports schools, which refers to a series of courses and programs offered by the company to teach a sport, rather than a specific physical location. The company currently offers sports programs at over 4,500 locations throughout Japan, serving more than 65,000 members. Founded in 2001, Leifras had revenue of $65 million for the 12 months ending June 30, 2024. The company plans to list on the Nasdaq under the ticker symbol LFS. Kingswood Capital Markets is the sole bookrunner for the transaction.

11/12/2024

Hong Kong financial consulting and IPO sponsoring service provider Gran Group (GRAN.US) plans to price its IPO at $4-5 per share, aiming to raise $10 million.

Hong Kong-based Grande Group (GRAN.US) officially submitted its IPO application to the U.S. Securities and Exchange Commission (SEC) on Tuesday, aiming to raise up to $10 million through an initial public offering (IPO). The group plans to issue 2.3 million shares priced between $4 and $5 per share, with an estimated market value of $113 million at the midpoint of the range. The stock symbol will be GRAN, and the group plans to list on the Nasdaq. Grande Group is a leading company offering financial consulting and IPO underwriting services. The group operates through its subsidiary Grande Capital, a boutique financial firm specializing in providing comprehensive IPO underwriting and corporate financial advisory services to Asian clients. Since its establishment, Grande Capital has successfully underwritten and completed 16 IPO projects on the Hong Kong Stock Exchange, demonstrating its professional strength and extensive experience in the industry. Established in 2018, Grande Group generated $5 million in revenue in the 12 months ending March 31, 2024, showcasing its steady business growth and strong financial performance. The IPO application was submitted in confidential form on July 24, 2024, with Guotai Securities as the sole bookrunner for the transaction and responsible for the related processes and execution.

11/12/2024

Malaysia ship refueling company TMD Energy(TMDE.US) plans to go public in the United States, aiming to raise $11 million.

TMD Energy, a Malaysian fuel bunkering service provider spun off from Straits Energy Resources, submitted an application for a U.S. stock market listing to the Securities and Exchange Commission (SEC) on Tuesday, planning to raise up to $11 million in funds through an initial public offering (IPO). It is understood that the ship fuel company, headquartered in Kuala Lumpur, Malaysia, plans to issue 3.1 million shares of stock at a price range of $3.25 to $3.75 per share, aiming to raise $11 million. At the midpoint of the proposed range, TMD Energy will have a total market value of approximately $81 million. Public information shows that TMD Energy's business is focused on providing bunkering services for ships, specializing in the supply of natural gas and fuel oil for large vessels, as well as sales network. The company operates in 19 ports in Malaysia, and operates 15 large bunkering vessels, providing ship-to-ship bunkering services. Its comprehensive bunkering service range can meet various types of maritime vessels, including container ships, oil tankers, large cruise ships, and accommodation work barges. TMD Energy also provides bunkering services for offshore structures such as semi-submersible drilling platforms, jack-up rigs, self-elevating drilling platforms, and drilling ships. Established in 2016, TMD Energy had accumulated revenues of approximately $728 million as of the 12-month period ending June 30, 2024. The company plans to list on the NYSE American under the stock symbol "TMDE". The company had previously submitted its application in secret on June 11, 2024. Maxim Group LLC is the sole bookrunner for the IPO transaction.

11/12/2024

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