IPO pricing | Tourover-W was subscribed 2.67 times, priced at HK$28 per share

According to Futu News on September 25th,$TUHU-W (09690.HK)$According to the announcement, the company issued about 42.4448 million shares, priced at HK$28 per share, and 100 shares per lot. It is expected to be listed on September 26.

Sale Overview

In the public offering phase, Touhu-W received about 2.67 times more subscriptions, and the final number of shares to be sold was 4.244,500 shares, accounting for about 10% of the total number of shares sold (before any overallotment rights were exercised). A total of 9305 valid applications were received, with a first-hand winning rate of 100%, and each subscription was stable.

Furthermore, the international offering was slightly oversubscribed, and the final number of shares offered was approximately 38.203 million shares, equivalent to about 90% of the total number of shares offered (before any over-allotment rights were exercised). The relevant data compiled by Futu Information is as follows:

Company Overview

Touhu-W is one of China's leading online and offline integrated car service platforms. As of March 31, 2023, its flagship app “Tour Rover Car Maintenance” and online interface had about 100 million registered users. In the last 12 months ended March 31, 2023, the company had 17.1 million trading users, an increase of 9.9% over 15.5 million in the same period ended March 31, 2022.

According to the Insight Advisory Report, in the three months ending March 31, 2023, Tourover's average monthly active users reached 10.2 million, and its platform has become the largest car owner community where Chinese car service providers gather. The company's service network continues to expand, with more than 4,700 Tourover factory stores and more than 19,000 cooperative stores across the country, covering most prefecture-level cities.

Tourover's platform serves most passenger car models sold in China, meeting automotive service needs from tire and chassis parts replacement to car maintenance, repair, and car grooming.

As of March 31, 2023, through the company's platform, its customers can select more than 66,000 models of automotive products from 286 car brands, including Tourover's own brands and exclusive brands. As of March 31, 2023, Tourover has launched 51 own brands, traded 7,429 SKUs through the company's platform in the past December month, launched 54 exclusive brands, and traded 2,239 SKUs through the platform in the past 12 months, covering tires, chassis parts, car care products, etc.

In terms of store types, Tourover has three different types of stores, including self-operated Tourover factory stores, affiliated Tourover factory stores, and third-party cooperative stores. Franchised Tourover factory stores operate using the same standards as self-operated Tourover factory stores and the company's proprietary technical systems. Tourover also has a large number of cooperative stores all over China, mainly providing installation services to customers who place orders through the company's online interface as a supplement to factory stores. According to the Insights Advisory Report, Tourover is the leading independent car service brand in China in terms of the number of car service stores it operates and brand awareness.

Financial Overview

In terms of financial conditions, Tourover recorded net losses of RMB 3.4 billion, RMB 3.9 billion, RMB 5.8 billion, RMB 2.1 billion, RMB 610 million and RMB 279 million in 2019, 2020, 2021 and 2022, and the three months ending March 31, 2023, respectively.

Source: Disclosure Yi

During the track record period, changes in the fair value of convertible redeemable preferred shares seriously affected the company's performance, and as the company's valuation continues to increase, such changes may continue to adversely affect its operating performance until convertible redeemable preferred shares are converted into common shares. Tourover expects that thereafter, it will not confirm any losses or gains from changes in the fair value of convertible redeemable preferred shares, and then re-record net asset value.

In 2019, 2020, 2021 and 2022 and the three months ended March 31, 2022 and 2023, the company's gross profit was approximately RMB 523 million, RMB 1.1 billion, RMB 1.9 billion, RMB 2.3 billion, RMB 533 million and RMB 790 million, respectively. The gross margins were 7.4%, 12.3%, 16.0%, 19.7%, 17.9% and 24.2% respectively.

The company's gross margin increased during the track record period, mainly due to (i) an increase in profit margin due to changes in the product and service category portfolio. (ii) There has been a reduction in procurement costs for several product categories. And (iii) The company's exclusive and private brands account for relatively high revenue, and their gross margin is generally higher than that of branded products.

Use of funding

In terms of fund-raising purposes, the company's estimated net proceeds from the global offering are approximately HK$1,081 million.

According to the prospectus, Tourover plans to use the net proceeds from the sale of shares for the following purposes: about 35% is expected to be used in the next three years to enhance supply chain capabilities; about 20% is expected to be used for research and development in the next three years to improve data analysis technology to further improve operational efficiency; about 15% is expected to be used in the next three years to expand the store network and franchisee base (especially in second-tier cities and counties below), expand operations and support teams, and further strengthen relationships with franchisees; about 20% is expected to be used in the next three years for investments related to vehicle services for NEV owners and such Investments in service-related tools and equipment provide funding; approximately 10% is expected to be used as working capital and general corporate purposes.

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