IPO Pricing | Deying Holdings received 7.31 times subscription, with a price of HK$2.05 per share

Futu Information reported on January 14 that this Friday$B.DUCK SEMK (02250.HK)$Announced that the company issued 120 million shares at HK$2.05 per share, with each lot consisting of 1,000 shares, expecting to be listed on January 17.

During the public offering phase, Deying Holdings received about 7.31 times subscription, and the final number of shares allocated to the public offering was 12 million shares, accounting for 10% of the total offering (before any over-allotment option is exercised). A total of 15,442 valid applications were received, with a one-lot winning rate of 30%, subscribing to 20 lots guarantees one winning lot.

In addition, the international offering was oversubscribed, with the final number of shares issued amounting to approximately 108 million shares, representing 90% of the total number of shares offered (before any over-allotment option is exercised). Futu Information has compiled the relevant data in the table below:

In terms of use of proceeds, the company plans to allocate the net proceeds from the global offering of approximately HKD 206.8 million for the following purposes: about 25.8% for enhancing brand image and intellectual property character recognition; around 25.7% will be used to establish the company's "fan platform"; approximately 17.5% will be used to strengthen the company’s new economy online sales channels; about 11.8% will be used to further enhance the company's internal design capabilities by hiring approximately 60 additional designers to provide creative and innovative solutions; roughly 9.2% will be used to repay existing debts of approximately HKD 40 million as of October 31, 2021, to improve the group's asset-to-liability ratio; and around 10% will be reserved as general working capital.

According to the Frost & Sullivan report, based on royalty revenue in 2020, the company is the second-largest domestic character intellectual property company in China, ranking fifth among all character intellectual property companies in China with a market share of approximately 2.4%. Based on 2020 sales, the company holds a market share of approximately 0.6% in China's character intellectual property product e-commerce market.

The company's core business lies in its intellectual property and brand, which includes creating, designing, and licensing its self-created, owned, and iconic B.Duck family characters, as well as managing these characters' brands and marketing them across multiple channels. Since B.Duck became popular in Hong Kong and mainland China, the company has created 25 other characters—B.Duck's family members and friends—including but not limited to Buffy, B.Duck Baby, Dong Duck, and Bath’N Duck.

In terms of financial performance, the company's total revenue for 2018-2020 was HKD 201 million, HKD 243 million, and HKD 234 million respectively, with revenue in the first half of 2021 reaching HKD 124 million, a year-over-year increase of 33%; the company’s net profits for 2018-2020 were HKD 10 million, HKD 24 million, and HKD 55 million respectively, with net profit in the first half of 2021 at HKD 17 million, a year-over-year increase of 23%.

In terms of revenue scale in China's mainland character licensing market, the market generated revenue of HKD 4 billion in 2020, and it is expected to reach HKD 6.8 billion by 2025, with a projected compound annual growth rate (CAGR) of 10% from 2021 to 2025.

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