On June 7, Futu news reported that on the first day of trading, it opened 46.55% higher and closed at HKD 8.5, with a turnover of HKD 12.7659 million and a total market value of HKD 2.796 billion. In the previous dark pool trading of Futu, Yisou Technology opened high and rose 43.10%, with a reported price of HKD 8.3, a turnover of HKD 3.0747 million, and a total market value of HKD 2.73 billion. 500 shares per lot, no handling fees, each lot earned HKD 1250. According to previous public information, Yisou Technology received approximately 114.59 times oversubscription during the public offering stage. The final number of shares allocated for public offering was 1.95 million shares, accounting for approximately 13.17% of the total share offering (after adjusting and redistributing the offering size). There were 9239 valid applications received, 1830 of which were accepted. The percentage of H shares distributed per lot was approximately 10.02% of the total number of applications. Futu news compiled the relevant data as follows:$EASOU TECH (02550.HK)$Industry Overview Yisou Technology's business development is closely related to China's internet business industry, especially the development of the digital content industry. The application of intelligent recommendation in the digital content field provides the company with a broad development space. From 2018 to 2023, the market size of China's internet business industry will increase from RMB 1.2246 trillion to RMB 2.1642 trillion based on revenue, and is expected to increase from RMB 2.2789 trillion in 2024 to RMB 2.5906 trillion in 2027, with a compound annual growth rate of 4.4%. In terms of the digital content industry, the market size will increase from RMB 886.6 billion in 2018 to RMB 1.5556 trillion in 2023. It is expected to increase further from RMB 1.6536 trillion in 2024 to RMB 1.8418 trillion in 2027, with a compound annual growth rate of 3.7%. Yisou Technology's business is also highly related to the development of China's digital culture and entertainment industry, which includes sub-markets such as online games, video, online animation, digital music, and digital reading. The size of China's digital culture and entertainment market increased from RMB 560.7 billion in 2018 to RMB 793.4 billion in 2023, with a compound annual growth rate of 7.2%. Despite the impact of the COVID-19 pandemic, geopolitical conflict, overseas interest rate hikes, and other factors, it is expected that under the push of China's gradual economic recovery, the continuation of user online entertainment habits, and the development of new technologies, the market size of China's digital culture and entertainment industry will continue to grow from 2024 to 2027. As such, the service market where Yisou Technology is located has enormous growth potential. With the continuous expansion of China's internet business and digital content industry, as well as the development of the digital culture and entertainment industry, Yisou Technology is expected to further consolidate and expand its position in the market.
Market source: Futu Securities.
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In terms of fundraising, Yisou Technology expects a net proceeds of approximately HKD 40.7 million (calculated at the final issue price of HKD 5.8 per share) from the global offering. According to the prospectus, the company plans to use 45.0% of the net proceeds to enhance the company's research and development capabilities to ensure long-term technological advantages; 25.0% will be used to enhance the company's strength as a third-party digital reading platform; 15% will be used to expand the company's digital marketing services; and 15% will be used to expand its network game distribution services in overseas markets.
Futu news compiled the relevant data in the following table:
Company overview
Since its establishment in 2005, Yisou Technology has been focused on providing digital reading platform services, digital marketing services, online game distribution services, and other digital content services. During the past performance period, over 90.0% of the company's revenue mainly came from advertising services provided in digital reading platform services and digital marketing services. The company's independently developed intelligent recommendation engine, "Yisou Recommendation Engine", plays a core role in meeting the specific needs of different business lines by collecting, analyzing, matching and predicting the needs and preferences of users and customers.
In the field of digital reading platform services, the cumulative registered user of Yisou series reading App as of December 31, 2023 is 44.7 million. During the previous performance period, the user activity on the company's platform has been increasing. The average monthly active users of Yisou series reading App have increased from 23.9 million in 2021 to 25.6 million in 2022, and further increased to 26 million in 2023.
Yisou Technology provides users and customers with a variety of third-party content data on the platform, including digital reading, advertising, online games, and other digital content (such as music and ring tones). When users use this content data, user behavioral data will be generated. The Yisou recommendation engine collects and analyzes such user behavior data to recommend more relevant content data, including literary resources and advertising content, and continuously trains algorithms to improve recommendation efficiency and effectiveness. At present, Yisou Technology has realized diversified commercialization models, mainly including subscription, pay-per-use, advertising revenue, and revenue sharing.
Financial overview
In terms of financial conditions, Yisou Technology's revenue in 2021, 2022, and 2023 was RMB 433 million, RMB 456 million, and RMB 559 million, respectively, with a compound annual growth rate of 13.61% from 2021 to 2023. The gross profit was RMB 209 million, RMB 239 million, and RMB 260 million, respectively, with a compound annual growth rate of 11.56% from 2021 to 2023. The net profit for the same period was RMB 50.01 million, RMB 44.448 million, and RMB 25.01 million, respectively.
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