HK IPO Subscription: Qiniu Intelligent IPO Analysis and Application Plan

Qiniu Limited (hereinafter referred to as "Qiniu Cloud") is a company providing audio and video cloud services in China, established in 2011 and continued as an exempted limited liability company under the Cayman Islands Companies Law on June 14, 2023. The company's major shareholders include Mr. Xu Shiwei and Mr. Lü Guihua, holding 73.5% and 26.5% of the company's shares, respectively.

Qiniu Cloud's business model primarily revolves around MPaaS (Media Platform as a Service) and APaaS (Application Platform as a Service). MPaaS products include interactive live streaming products and intelligent media data platforms, while APaaS solutions cover various application scenarios such as social entertainment and video marketing. Through these services, the company helps clients achieve the collection, storage, processing, distribution, and analysis of audio and video content.
 

According to data from iResearch, Qiniu Cloud holds a 5.8% market share in China's audio and video PaaS market, ranking third. Meanwhile, in China's audio and video APaaS market, Qiniu Cloud ranks second with a 14.1% market share. This indicates that Qiniu Cloud has strong competitiveness in China's audio and video cloud service market.
 

In recent years, Qiniu Cloud's total revenue has shown a fluctuating trend. Total revenue was RMB 1,471.0 million in 2021, slightly decreased to RMB 1,147.3 million in 2022, but achieved significant growth in 2023, reaching RMB 1,334.0 million. Additionally, the company's gross profit and gross margin have shown an upward trend year by year, demonstrating certain advantages in cost control and product pricing.
 

With the development of technologies such as 5G, AI, and cloud computing, the audio and video cloud service market has entered a phase of broad growth potential. According to iResearch's forecast, the size of China's audio and video cloud service market will grow from RMB 91.5 billion in 2023 to RMB 240.5 billion in 2028, with a compound annual growth rate of 21.3%. This presents significant development opportunities for market participants like Qiniu Cloud.
 

Although Qiniu Cloud has certain competitive advantages in the market, it also faces some risk factors. First, the market competition is intense, and the company needs to continuously improve the quality and innovation of its products and services to maintain competitiveness. Second, demand in the audio and video cloud service market may be affected by macroeconomic conditions, policies, and regulations. Additionally, the company needs to focus on cybersecurity and data privacy protection to ensure the security of customer data and information.

Use of Proceeds

1. Penetrate and solidify our market share in APaaS business application scenarios and expand our customer base: Approximately 38.0% (or about HKD 142.4 million) of the net proceeds is expected to be used for this purpose.

2. Expand overseas business: Approximately 20.0% (or about HKD 74.9 million) of the net proceeds is expected to be used for this purpose.

3. Enhance our R&D capabilities and improve our technical infrastructure: Approximately 12.0% (or about HKD 45.0 million) of the net proceeds is expected to be used for this purpose.

4. Selected mergers, acquisitions, and strategic investments: Approximately 20.0% (or about HKD 74.9 million) of the net proceeds is expected to be used for this purpose.

5. Working capital and general corporate purposes: Approximately 10.0% (or about HKD 37.5 million) of the net proceeds is expected to be used for this purpose.

These uses are intended to support the company's further development and technological innovation in the audio and video cloud service market.

IPO Information:

Pre-IPO Investors and Cornerstone Investors:

The company has completed multiple rounds of financing, with the last round completed on December 2, 2018, at HKD 2.8978, with a post-investment valuation of USD 682.6 million, approximately HKD 5.307 billion. Pre-IPO investors are subject to a 12-month lock-up period.

The company has introduced He Shun Limited Partnership as a cornerstone investor, subscribing to 63.9 million shares, accounting for 40% of the cornerstone portion; the lock-up period is 12 months.
 

Sponsors:

The company is jointly sponsored by Shenwan Hongyuan and BOCOM International, with Shenwan Hongyuan acting as the stabilizing agent. Shenwan Hongyuan has not sponsored any projects in the past two years, and its previous sponsorship history includes six consecutive failures. BOCOM International's last project, Wuhan Organic, saw a significant rise due to a 套路回拨 (tactical clawback), while other projects performed poorly. Shenwan Hongyuan's two projects as a stabilizing agent also ended with first-day declines!

Financial Situation:

Revenue:Revenue was RMB 1.471 billion in 2021, RMB 1.147 billion in 2022, and RMB 1.334 billion in 2023.

Gross Profit:Gross profit was RMB 291 million in 2021, RMB 228 million in 2022, and RMB 280 million in 2023;

Annual Loss:Net loss was RMB 220 million in 2021, RMB 213 million in 2022, and RMB 324 million in 2023;

Lottery Winning Rate:

The company is offering 159.75 million shares globally, with 1,000 shares per lot. As of the time of writing, the oversubscription rate is 3.96x. Based on the current margin financing situation, there will be no clawback. There are 7,987.5 lots each for Group A and Group B, with an estimated 3,000-7,000 participants. The lottery winning rate for one lot is 100%.

Comprehensive Review:

Qiniu Smart is a major player in the audio and video cloud service market, ranking third in China's audio and video PaaS market in 2023. The top five players include Alibaba Cloud, Tencent Cloud, Baidu Intelligent Cloud, Agora, and the company. The other three are subsidiaries of BAT giants, none of which are listed, making them incomparable. Agora, which listed on the U.S. stock market in 2020, is in the same audio and video cloud service sector and can be directly compared.

Agora's peak was in February 2021, when its stock price reached a high of USD 114.965, 44 times its current price, with a total market capitalization exceeding USD 10 billion. Now, its stock price is USD 2.57, with a market capitalization of only USD 236 million, approximately HKD 1.838 billion. Agora's revenue in 2023 was USD 142 million, approximately RMB 996 million, with a net loss of USD 87.219 million, approximately RMB 678 million. Qiniu Smart's revenue in 2023 was RMB 1.334 billion, with a net loss of RMB 324 million. If calculated based on revenue, Qiniu's reasonable market capitalization would be HKD 2.5 billion. If calculated based on net loss, Qiniu's maximum market capitalization would be HKD 3.8 billion.

From a fundamental perspective, I'm completely uninterested. The company filed for an IPO with the U.S. SEC in February 2021, when Agora was at its peak. Needless to say, it was rejected. Three and a half years later, the situation has completely changed. Those days are gone! In terms of sentiment, this offering aims to raise HKD 437.7-456.8 million, with cornerstone investors locking up 40%. The free float is around HKD 270 million. For a company of this quality, especially with a comparable peer, this free float isn't particularly small. The company's shareholder lineup is strong, yet none of them joined as cornerstone investors. Are they afraid of making too much money?

Niu Bang Rating: Bronze Bull
 

Rating Explanation: True Bull > Golden Bull > Silver Bull > Bronze Bull > Pot Bull (True Bull rating means go all-in with margin financing; Golden Bull rating means extremely high certainty, also use margin financing; Silver Bull rating means decent certainty, can spread across multiple accounts; Bronze Bull rating means unstable, prone to sharp rises and falls; Pot Bull rating means no need to participate)

Subscription Plan:

Pass on this one.

$QINIU(02567.HK) 
 

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