IPOs

Youdao kicks off a flood of Chinese companies attempting US IPOs

In the past few weeks, seven Chinese companies have joined the US IPO pipeline.

On Tuesday, education platform Youdao (DAO) kicked off the oncoming flood of deals, setting terms to raise $92 million at a $2.0 billion valuation. It was joined by a small provider of aesthetic procedures, Aesthetic Medical International (AIH). Both are on the IPO calendar for October, and both launched with a deal size of less than half the amount in the initial filing.

Chinese IPOs move forward despite negative news
The rush of filing activity comes in the midst of a US-China trade war, poor returns from recent Chinese IPOs, political turmoil in Hong Kong, the Nasdaq's crackdown on small Chinese IPOs, and the Trump administration's blacklisting of certain Chinese firms and its push for greater transparency by Chinese filers (and rumors that it considered delisting Chinese stocks).

Chinese issuers have had poor returns
So far this year, 13 Chinese issuers have listed in the US (ex-SPAC), with 63 coming public since the start of 2017. For a look at average IPO returns for Chinese issuers, sign up for a free trial of IPO Pro.

10 Chinese IPOs are on the "active backlog" including 7 recent filers
Below, we highlight the seven Chinese filers over the past month. In addition to the names listed below, AI software developer CloudMinds (CMDS; $500M deal size), insurance marketplace Huize Holding (HUIZ; $110M), and information sharing service Global Internet of People (GIP; $20M) are also on file for US IPOs, all of which have updated their filings in the past 45 days.

Youdao (DAO), an online education platform being spun out of NetEase, filed to raise $92 million on the NYSE at a range of $15 to $18, for a $2.0 billion market cap (14x LTM EV/sales). In the 1H19, it grew revenue by 68% to $80 million (-28% EBITDA margin), with over 100 million average total MAUs across its offerings. Yaodao provides various apps and online courses, including China's number one language app, and generates revenue from tuition and subscriptions (57%) as well as online ads (43%). 

Aesthetic Medical International (AIH), which provides aesthetic medical treatments, filed to raise $30 million on the Nasdaq at $11 to $13, for a market cap of $283 million (11x LTM EV/EBITDA). China's third-largest private aesthetic medical services provider, the company grew sales by 10% in the 1H19 to $55 million, with an operating margin of 9%.

Fangdd Network Group (DUO), a Chinese online real estate trading platform, filed to raise $150 million on the Nasdaq. It was the largest online real estate marketplace in China in 2018 based on its more than 900,000 registered agents. In the 1H19, sales jumped 55% to $227 million (5% EBITDA margin).

Q&K International (QK), which operates a long-term apartment rental platform, filed to raise $100 million on the Nasdaq. Founded in 2012, the company has grown its platform to more than 91,000 available rental units. Q&K booked trailing revenue of $169 million (-17% EBITDA margin), with sales growth of 36% in the MRQ.

36Kr Holdings (KRHO.RC), an online media publisher focused on New Economy companies in China, filed to raise $100 million on the Nasdaq. Backed by Ant Financial, 36Kr built a user base with self-published content and then began offering online advertising, subscriptions, and enterprise value-added services. In the 1H19, 36Kr’s revenue nearly tripled to $29 million (-8% EBITDA margin).

Ecmoho (MOHO), an online health and wellness retailer, filed to raise $150 million on the Nasdaq. It offers over 5,000 SKUs from 39 brand partners such as Gerber and Puritan's Pride, primarily selling mother/childcare products (45% of product sales), health supplements/food (40%), and personal care products (9%). Revenue more than doubled in the 1H19 to $151 million, while EBITDA margin ticked up to 3%.

MingZhu Logistics Holdings (YGMZ), which provides trucking and logistics services, filed to raise $13 million on the Nasdaq. MingZhu Logistics operates a fleet of 132 tractors and 90 trailers out of two terminals in the Guangdong and Xinjiang regions.

7 Recent Filings from Chinese Companies
IssuerBusiness Deal Size Sector Lead Underwriter
 Youdao (DAO) $92M Technology Citi
Chinese online education platform being spun out of NetEase.
Aesthetic Medical International (AIH) $30M Health Care Cantor
Provides aesthetic medical treatments in China.
Fangdd Network Group (DUO) $150M Real Estate Morgan Stanley
Chinese online real estate trading platform.
Q&K International Group (QK) $100M Real Estate Morgan Stanley
Operates a long-term apartment rental platform in China.
36KR Holdings (KRHO.RC) $100M Technology Credit Suisse
Online media publisher focused on New Economy companies in China.
Ecmoho (MOHO) $150M Technology UBS
Online retailer selling health and wellness products in China.
MingZhu Logistics Holdings (YGMZ) $13M Industrials ViewTrade
Provides trucking services and logistics in China.

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Youdao kicks off a flood of Chinese companies attempting US IPOs

Investment Disclosure: Renaissance IPO ETF (symbol: IPO) Renaissance International ETF (symbol: IPOS)

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.