Chinese live streaming platform Inke formally launched its IPO and started trading this morning in Hong Kong.
As an early entrant to the sector, Inke (映客) has grown quickly during China’s live streaming frenzy that started in 2016. And while many of 200+ smaller platforms died off after the market cooled down and regulations set in, Inke has become one of the most invested-in upstarts in the country. According to an open letter from Inke CEO Feng Yousheng, the company has won over 200 million registered members in 3 years.
The final IPO price per share was set at HK $3.85, the lower end of the expected share price. Calculating with the 300 million shares the IPO plan decides, Inke will raise HK$ 1.05 billion, missing the expected HK$ 1.21 billion. As Feng Yousheng stated in the letter:
“In 24 hours, we will be witnessing the Time for Inke at Hong Kong Stock Exchange. Inke will then become the No.1 entertainment and live streaming stock in Hong Kong’s capital market.”
This is not Inke’s only IPO attempt. In 2017, the company hoped to indirectly go public by allowing a communications agency called Shunya International Brand Consulting to purchase over 50% shares of Inke’s developer company Beijing Milaiwu Network Technology. However, after around 6-months’ negotiation, the two parties abandoned the acquisition due to policy uncertainty and disagreement on the transaction price.
According to Inke’s filing, the company’s annual revenue declined from RMB 4.33 billion ($ 646 million) in 2016 to RMB 3.94 billion in 2017. Inke lowered cost of sales, selling and marketing expenses, and administrative expenses in order to improve the adjusted net profit RMB 790 million that increased 40.4% year-over-year and the operating profit RMB 871 million that increased 76.4% year-over-year.
Meanwhile, Inke’s cash holding (cash and cash equivalents at end of year/period) increased 54.7% to RMB 2.2 billion year-over-year in 2017.
The company generates most of their revenues from the live streaming business where users can purchase Inke Diamonds, their virtual currency, to purchase virtual items and other services. Virtual items that live steamers received are converted to Inke Coins. Up to a certain amount, they can be exchanged for RMB.
Besides Inke, Chinese live streaming company Huya (HUYA) landed in the US in May. Its share price soared from the initial opening price $15.5 to $36.47 (July 11, US EST). By the publication of this article, Inke’s share price has increased around 20%, hitting HK$4.6.