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Busy Day on Wall Street: Three Chinese Firms Set for IPOs on Thursday

On Thursday of the busiest week on Wall Street this year, three Chinese tech platforms, Aurora Mobile, Cango, and Pinduoduo, are preparing to offer their shares to U.S. investors.

Anna Vodopyanova
    Jul 25, 2018 4:44 PM  PT
Busy Day on Wall Street: Three Chinese Firms Set for IPOs on Thursday
(Bilin Lin / CapitalWatch - New York)

It's a busy day on Wall Street tomorrow for Chinese companies. 

Three online platforms, Aurora Mobile Ltd., Cango Inc., and Pinduoduo Inc., are set to launch their IPOs in offerings totalling nearly $2 billion. The biggest by far is Pinduoduo, which is an e-commerce platform rivaling e-commerce giant Alibaba Group Holding Ltd. (NYSE: BABA) in some of China's cities.

The initial public offerings of American depositary shares come on what would be the second-busiest week on Wall Street this year with 11 deals expected to be completed.

CapitalWatch will monitor the companies' Day One tomorrow and report with interviews of top company executives.

Aurora Mobile "JG"

Aurora Mobile is set to float on the Nasdaq Global Market, seeking to raise $144.9 million in an initial public offering. Under the ticker symbol "JG," the firm plans to offer 9.2 million shares at a maximum price of $15.75 per American depositary share, according to its amended prospectus filed July 24.

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Aurora collects real-time mobile behavioral data to help clients make business decisions. The company's data solutions include targeted marketing, financial risk management, market intelligence, and location-based intelligence. The company uses artificial intelligence (AI) and machine learning (ML) as key components of its technology.

In the first quarter of this year, Aurora said its customer base grew to 1,348 from 980 a year ago. Revenue during the same period soared 295 percent to $20.2 million with its net loss of $3.5 million staying level year-over-year. Overall, in 2017, Aurora's revenue was $45.4 million, a 305 percent increase from a year earlier. The company's loss last year widened by 47 percent to $14.4 million.

Pinduoduo "PDD"

Also lifting off on Nasdaq is Pinduoduo, a three-year-old unicorn valued at between $20 billion to $24 billion. The online discounter, backed by tech giant Tencent Holdings Ltd., is seeking to raise up to $1.63 billion by selling 85.6 million American depositary shares at between $16 and $19 per share.

The platform operates by selling low-priced products and services and is accessible to users directly or through social networks like Weixin and QQ. Socializing is a main feature of the online marketplace.

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Pinduoduo's founder, an ex-Google engineer, Zheng (Colin) Huang, said the company strives to combine the principles of "Costco" and "Disneyland," bringing together value-for-money and entertainment, through a decentralized network and social interaction.

Its revenue in the first quarter of this year was $220.7 million compared with $5.9 million a year ago. Its net loss during the same period was $32 million, a 3 percent decrease year-over-year. For 2017, Pinduoduo reported revenue of $278 million, more than triple the revenue of 2016. Its net loss last year was $83.7 million compared with a loss of $46.6 million in 2016.

By March 31, the company's average monthly active users reached 65 million, according to its prospectus.

Cango "CANG"

An online car marketplace, Cango, plans to float on the New York Stock Exchange. The company is seeking to land as much as $48 million through its initial public offering by selling 4 million ADSs at between $10 and $12 each.

Cango operates an online platform connecting businesses and consumers in the Chinese auto industry, including dealers of new and used cars, financial institutions, and car buyers.

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Service fees for facilitating financing make up most of Cango's revenue. The company, however, bears no credit risk under its agreements with some third-party institutions, such as Jincheng Bank and Jiangnan Rural Commercial Bank, which have been financing most of its loans. In addition, Cango collects car buyer data and uses cloud-based technology and analytics for risk assessment.

In the first quarter, Cango said it had arranged financing on more than 97,000 car purchases with the amount of financing reaching $900 million, representing a 7 percent increase from the same time last year.

In the first three months of 2018, Cango's revenue increased by 27.5 percent year-over-year to $39.7 million. Net income during the first quarter grew to $13.4 million, a 13 percent increase. For 2017, Cango reported its revenue grew 142 percent to $167.7 million. Earnings during the year surged 162 percent to $55.7 million.

Underwriters on the deal, Morgan Stanley & Co. International, Merrill Lynch, Pierce, Fenner & Smith Inc., and Goldman Sachs (Asia) LLC, will have an option to acquire 600,000 additional shares.

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