IPO Pricing | Youbao Online received 11.29x subscription, priced at HK$10.35 per share

According to Futu News on November 2,$UBOX ONLINE (02429.HK)$According to the announcement, the company will issue approximately 22.5765 million shares, priced at HK$10.35 per share, and 500 shares per lot. It is expected to be listed on November 3.

Sale Overview

At the public sale stage, Youbao Online was subscribed about 11.29 times. The final number of shares distributed to the public sale was 2.258 million shares, accounting for about 10% of the total number of shares offered (before any over-allotment rights were exercised). A total of 1,778 valid applications were received. The first-hand winning rate was 15.02%, and the 12-lot subscription was stable.

Furthermore, the international offering was slightly oversubscribed. The final number of shares offered was approximately 203.18,500 shares, equivalent to about 90% of the total number of shares offered (before any overallotment rights were exercised). Futu Information collates relevant data in the following table:

Company Overview

Youbao Online is a vending machine operator in mainland China, accounting for 7.6% of the market share based on total products in 2022. The company is committed to deepening the unmanned retail industry in mainland China (a segment of the retail industry), and has established digital and operational capabilities, covering product procurement, logistics and inventory management. Its main businesses are: (i) unmanned retail business; (ii) advertising and system support services; (iii) wholesale of goods; (iv) vending machine sales and leasing; and (v) others.

Through its extensive sales point (or “point”) network, Youbao Online can provide services to a wide range of participants in the unmanned retail industry value chain. The point network has covered a wide range of consumption scenarios such as schools, factories, offices, public places, transportation hubs and restaurants. As of June 30, 2023, the company network has 61,888 vending machine Youbao locations, spread across 157 cities and 28 provincial administrative regions in mainland China, of which 87.3% are concentrated in first-tier, new first-tier and second-tier cities.

According to Frost & Sullivan's data, in 2019, 2020, 2021 and 2022, Youbao Online ranked first in the unmanned retail industry in mainland China (mainly including vending machines, unmanned stores and unmanned shelves) in mainland China.

Financial situation

In terms of financial conditions, the revenue achieved by Youbao Online was drastically reduced from RMB 2,727.5 billion in 2019 to RMB 1,902 million in 2020, to RMB 2,676.2 billion in 2021, and reduced to RMB 2,519.2 billion in 2022.

Youbao Online's revenue increased from RMB 1,143.1 billion for the six months ended June 30, 2022 to RMB 1,252.7 billion for the same period as of 2023, mainly due to increased revenue from the unmanned retail business and wholesale business due to the relaxation of COVID-19 policies and the overall resumption of passenger traffic and business activities.

The company's gross profit for 2019, 2020, 2021, 2022 and the six months ended June 30, 2022 and 2022, respectively, was RMB1,329.2 million, 558.6 million, $1,101.1 billion, RMB1,076.7 million, $510.2 million and $518 million respectively.

Furthermore, the company's gross profit increased from RMB 510.2 million for the six months ended June 30, 2022 to RMB 518 million for the same period in 2023. This is mainly due to an increase in revenue from unmanned retail businesses, partially offset by a decrease in revenue from advertising and system support services. Gross margin fell from 44.6% in the six months ended June 30, 2022 to 41.3% in the same period in 2023

Use of funding

In terms of fundraising, Youbao Online estimates that the net proceeds will be HK$154.9 million. According to the prospectus, the company plans to use the net proceeds from the sale of shares for the following purposes: approximately 80.0% will be used to expand the coverage and penetration rate of the point network; approximately 5.0% will be used to further develop operational capabilities and enhance warehouse storage management capabilities through the construction and upgrading of warehousing and/or logistics systems throughout mainland China; approximately 7.0% will be used to further develop R&D capabilities and enhance operation systems and vending machine technology; and approximately 8.0% for working capital and other general corporate purposes.

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