IPO | Chalk is offering shares now and is expected to go public on January 9

Futu News reported on December 23,$FENBI (02469.HK)$The stock offering is ongoing. The company plans to issue 20 million shares from December 23 to December 30. Of these, 2 million shares will be publicly sold, 18 million shares will be sold internationally, with an issue price of HK$9.5-9.9 per share, and 500 shares per lot. It is expected to be listed on January 9.

Chalk is a non-academic vocational education and training service provider in China, committed to providing high-quality non-academic vocational education and training services through technology. The company mainly provides a full range of recruitment and qualification examination training courses for adult students seeking development in public positions and institutions as well as in a number of other professions and industries. The company has successfully turned “Chalk” into one of the most well-known brands in the Chinese vocational exam training industry.

Chalk has developed a comprehensive portfolio of vocational exam training products and services with strong synergies. The company has developed high-quality online training courses in the form of live or recorded broadcasts, which are complemented by online self-study materials and tools. The company launched a wide range of offline training in May 2020 to expand target markets and serve a wider group of students.

With the huge user base and good reputation accumulated by the online business, Chalk can identify users with offline education needs and convert them into offline enrollment, which enables the company to quickly and effectively expand its offline business. Chalk has also established a centralized operation system to ensure the synergies and operational efficiency of the combination of online and offline (“OMO”). As of June 30, 2022, the company has established an extensive offline network of local operation centers, covering more than 220 cities in 31 provinces, autonomous regions and municipalities directly under the Central Government of China.

Financially, the company's revenue comes mainly from the provision of training services. From 2019 to 2021, the company's total revenue was RMB 1.16 billion, RMB 2.13 billion, and RMB 3.43 billion respectively, with a compound annual growth rate of 71.9%; in the first half of 2022, the company's total revenue was RMB 1.45 billion.

From 2019 to 2021, the company's adjusted net profit/loss was RMB 175 million, -363 million yuan, and -822 million yuan; in the first half of 2022, the company's adjusted net profit was RMB 95.63 million.

On the industry side, driven by a favorable regulatory environment, increasingly competitive in the job market, and rising job market requirements for talent qualifications, according to the Frost & Sullivan report, the market size of China's vocational education and training industry increased from RMB 516.7 billion in 2016 to RMB 781.1 billion in 2021 in terms of revenue, with a compound annual growth rate of 8.6%. It is expected to reach RMB 1,097.9 billion by 2026, with a compound annual growth rate of 7.0% from 2021 to 2026.

In terms of fund-raising purposes, the company plans to use the net proceeds from global sales of approximately HK$116 million for the following purposes: about 52.0% will be used to enrich course content and expand the student base; about 28.5% will be used to strengthen content and technology development capabilities; about 12.0% will be mainly used to develop marketing activities for newly developed courses; and about 7.5% will be used for working capital and other general corporate purposes.

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