On February 28th, Youzan Technology Co., Ltd. (referred to as Youzan Technology) submitted a prospectus to the Hong Kong Stock Exchange for listing on the main board of Hong Kong, with GF Capital (Hong Kong) as its sole sponsor. The company is a non-wholly-owned subsidiary of China Youzan (08083).
一、The largest cloud business service provider in China
According to Frost Sullivan, Youzan Technology Co., Ltd. is a leader in China's cloud business services industry. It is the largest cloud business service provider in China by 2019 revenue, accounting for 6.3% of the market share.
Photo source: group website
Among them, cloud business services mainly include subscription solutions and merchant solutions, that is, SaaS products specially designed for merchants in a variety of industries, including likes and likes Mall, likes retail, likes chains, praise industries and likes education.
Photo Source: preliminary IPO document
As of September 30, 2020, Youzan Technology has more than 6 million registered merchants, including 97875 paying merchants.
Second, financial growth has been achieved year after year.
According to the prospectus, in the past nine months of 2018, 2019 and the first nine months of 2020, Youzan Technology's operating income was 557 million yuan, 998 million yuan and 1.13 billion yuan respectively, and the corresponding net loss was 714 million yuan, 503 million yuan and 219 million yuan respectively. Accumulated losses of 1.433 billion yuan over the past three and a half years.
Photo Source: preliminary IPO document
The market for cloud services is expected to reach 290 billion
Thanks to the sustained development of information and communication technology, enterprise digitization, and government promotion and investment in cloud technology, the total market size of China's cloud services reached 69 billion yuan in 2019, with a compound annual growth rate of 61.3 percent from 2015 to 2019. It is expected to reach 297.2 billion yuan in 2024.
Photo Source: preliminary IPO document
IV. Be optimistic about the long-term growth potential of Youzan
In the pre-IPO shareholder structure of Youzan Technology, the controlling shareholder is China Youzan (08083.HK), which holds 51.9% of the shares. After this transaction, non-interest plan shareholders will hold a 39.56% stake in Youzan Technology.
After the listing on the motherboard, Youzan Technology will not include payment business, and the business structure of the main body of listed companies will be simplified and focus on SaaS business. As the ability of the company to create more total assets with SaaS business than from payments and other total assets, focusing on SaaS business will help the company to make better use of and manage its financial resources.
To sum up, be optimistic about the long-term growth potential of Youzan technology and wait for the value of time to become apparent.
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Author: Eddard Securities Futures