FANGZHOU JIANKE's Hong Kong Stock Exchange IPO debuted and broke: Over 60% of the fundraising amount was "earned" by investment banks

On July 9th, FANGZHOU JIANKE (6086.HK), which is known as having the largest online chronic disease management platform in China, was officially listed on the Hong Kong Stock Exchange.

However, the stock price fell below the IPO price on the first day of listing, with FANGZHOU JIANKE's intraday decline reaching 43.28% on July 9th.

In this listing, FANGZHOU JIANKE raised a total of HKD 195 million, but the net amount raised was only HKD 67 million.

Out of this, HKD 127 million was used for listing expenses.

Therefore, FANGZHOU JIANKE's listing expenses accounted for 65.54% of the IPO fundraising amount.

"This is because there are quite a few underwriters, and the IPO is like working for the investment banks. However, there are also companies where listing expenses account for 80%, so this is considered acceptable." A banker in Shenzhen told Xin Feng (ID: TradeWind01).

FANGZHOU JIANKE hired a considerable number of intermediary institutions, including Citigroup, ICBC International, and a total of 19 investment banks.

Despite the large number of intermediary institutions hired by FANGZHOU JIANKE, the fact that over 60% of the listing expenses are still relatively high.

According to data from Wind provided by Xin Feng (ID: TradeWind01), among the 35 companies listed on the Hong Kong Stock Exchange from January to July 9th, apart from FANGZHOU JIANKE, only two companies, Yuanxu Technology (8637.HK) and Wuhan Organic (2881.HK), had listing expenses exceeding 60%, reaching 81.59% and 74.32% respectively.

However, this may be related to the size of the IPO fundraising. According to data from Wind provided by Xin Feng (ID: TradeWind01), the median value of listing expenses for these 35 Hong Kong Stock Exchange companies is HKD 51 million.

This means that if the overall IPO fundraising amount is limited, it is possible that most of the fundraising amount is earned by the investment banks.

From a fundamental perspective, FANGZHOU JIANKE mainly provides diagnosis, treatment, and pharmacy retail services to users through the operation of the Jianke APP. By the end of 2023, the number of paid users had reached 4.4397 million.

Despite the diversified nature of its business structure, the essence of FANGZHOU JIANKE's business may still be "selling medicine." From 2021 to 2023, the revenue from retail pharmacy business was RMB 1.011 billion, RMB 1.252 billion, and RMB 1.297 billion respectively, accounting for over 50% each year.

Although FANGZHOU JIANKE's revenue has reached a considerable scale, it is still in a loss-making state.

From 2021 to 2023, FANGZHOU JIANKE's revenue was RMB 1.76 billion, RMB 2.204 billion, and RMB 2.438 billion respectively, with net losses of RMB 304 million, RMB 383 million, and RMB 197 million during the same period.

Source: FANGZHOU JIANKE