IPO | Readboy begins its subscription today, expected to list on July 12

Futu Information June 29 update, this Wednesday$READBOY (02385.HK)$An announcement was made that the subscription will take place from June 29 to July 5. The company plans to issue 52 million shares, of which 5.2 million shares will be for public offering and 46.8 million shares for international offering. The issue price per share is between HKD 7.6 to 10, with each lot consisting of 400 shares, and it is expected to list on July 12.

The company is a supplier of smart learning device services in China, focusing on designing, developing, manufacturing, and selling smart learning devices embedded with digital teaching resources for Chinese primary and secondary school students, their parents, and school teachers. It has become one of China's leading suppliers of tech-empowered smart learning device services with mature educational products and services.

According to the Frost & Sullivan report, in 2021, the company ranked second among intelligent learning device service providers in China in terms of total retail market value, and fifth in terms of total device shipments. The Readboy brand has become a well-known educational technology brand in China. As of the latest practicable date, the company's registered users have exceeded 5.5 million cumulatively, and as of May 2022, the company had an average monthly active user base of over 1.4 million in the previous 12 months.

In terms of financial performance, the company's revenues for 2019 to 2021 were RMB 670 million, RMB 734 million, and RMB 813 million respectively, with a compound annual growth rate of 10.16% over the three years. Net profits were RMB 69.435 million, RMB 92.013 million, and RMB 82.146 million respectively.

In the industry, with continuous upgrades in smart hardware and improvements in software services, the intelligent learning device market has grown rapidly in recent years. In 2021, the scale of China’s intelligent learning device market reached RMB 65.9 billion, and it is expected to reach RMB 145 billion by 2026, with a compound annual growth rate of 17.1% from 2021 to 2026.

The company has entered into cornerstone investment agreements, under which the cornerstone investors have agreed to subscribe for a certain number of offered shares at the issue price subject to certain conditions. Based on an issue price of HKD 8.80 per share (the mid-point of the issue price range), the total number of shares subscribed by the cornerstone investors will be 24,358,800 shares. The cornerstone investors include Mr. Zheng Changping, Mr. Gui Chunfang, Azure Telecommunication, Jin Shunlong Limited, Tower Lead Limited, Oriental Source Limited, Ms. Yang Xiaojie, and Mr. Jin.

In terms of use of proceeds, the company intends to allocate the net proceeds from the global offering as follows: approximately 35% will be used to deepen the reform of the company's distribution network and strengthen its regional expansion and penetration; approximately 25% will be used for research and development of the company's information technology and infrastructure to enhance the company’s overall technological advantage in providing smart learning devices equipped with digital teaching resources; approximately 20% will be used to invest in optimizing the company's product and service offerings to further improve the group's competitiveness; approximately 10% will be used to strengthen the company’s textbook development capabilities and diversify the group's digital teaching resources; and approximately 10% will be used as working capital and for general corporate purposes.

Further Reading:Infographic | Readboy goes public in Hong Kong, aiming to become China's leading education smart hardware stock

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