IPO pricing | Huitongda Network was subscribed 1.67 times, priced at HK$43 per share

Futu News, February 17, this Thursday$HUITONGDA NET (09878.HK)$The announcement announced that the company will issue 51.6062 million shares, priced at HK$43 per share, and 100 shares per lot. It is expected to go public on February 18.

During the public offering phase, Huitongda Network received 1.67 times more subscriptions. The final number of shares offered distributed to the public sale was 5.167,700 shares, accounting for about 10% of the total number of shares offered (before any over-allotment rights were exercised).A total of 10,896 valid applications were received, with a first-hand winning rate of 43.91%, and a steady stream of 3 subscriptions.

Furthermore, the international offering has been slightly oversubscribed, and the final number of shares offered was about 464.45,500 shares, which is equivalent to about 90% of the total number of shares offered (before any over-allotment rights are exercised). Futu News has compiled relevant data in the following table:

The company's net proceeds of approximately HK$2.1 billion (assuming no overallotment rights are exercised) will be used for the following purposes: approximately 30% will be used to strengthen relationships with existing customers and further expand the company's customer base; approximately 25% will be used to optimize the capacity and efficiency of the company's supply chain;, approximately 20% will be used to increase investment in IT infrastructure of the company's platform and enhance the profitability of the SaaS+ business in stores; and approximately 15% will be used for selective strategic cooperation, investment or acquisition with the following participants. About 10% will be used as working capital.

Huitongda Network is a trading and service platform for enterprise customers in the retail industry in declining markets. We are committed to providing retail industry chain participants with comprehensive services such as online and offline supply chain solutions, store SaaS+ services, and merchant solutions through business model innovation and digital capabilities.

According to Frost & Sullivan's report, China's sinking retail market covers all rural and suburban retail markets in China and suburban areas in non-tier 1 and 2 cities. According to the scale of transactions for sinking markets in 2020,Huitongda Network ranked first among trading platforms serving enterprise customers in the retail industry in China。

In the nine months ended September 30, 2021, Huitongda Network had 57,074 active member retail stores, 13,653 active channel partner customers, and 4,268 suppliers, forming a retail ecosystem covering 21 provinces and more than 20,000 townships across the country, with more than 175,000 SKUs.

In terms of financial conditions, the company's revenue increased by 46.4% from RMB 29.802 billion in 2018 to RMB 43.633 billion in 2019, and further increased 13.7% to RMB 49.629 billion in 2020. The company's adjusted net profit (not measured by IFRS) increased by 100.7% from RMB 124 million in 2018 to RMB 250 million in 2019, and further increased by 29.1% to RMB 322 million in 2020.

In terms of industry, the growth rate of China's retail market has declined significantly in recent years. The market size increased from 9.9 trillion yuan in 2015 to 15.1 trillion yuan in 2020, with a compound annual growth rate of 8.8%, and is expected to continue to grow to 20.6 trillion yuan in 2025.

Among them, the total retail sales scale of durable goods and agricultural production materials reached 4.7 trillion yuan in 2020, and is expected to reach 7.3 trillion yuan in 2025, with a compound annual growth rate of 9.4%, which is higher than the overall growth rate of China's sinking market.

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