Aihuishou, a Chinese electronics resale platform backed by e-commerce giant JD.com, applied to an initial public offering (IPO) on the New York stock exchange on Friday.
Why it matters: The Shanghai-based company is one of China’s largest second-hand goods platforms. Unlike its larger peers, Alibaba’s Xianyu and 58.com’s Zhuanzhuan, it focuses on electronics. JD.com is Aihuishou’s biggest investor, owning 34% of its ordinary shares before the offering.
- Expect to see a new wave of Chinese technology companies from lesser-known sectors file for IPOs as more Chinese unicorns are maturing.
Details: Aihuishou is operating at a loss, but it is narrowing the gap.
- The company listed a placeholder amount of $100 million in its Friday IPO filing to the US Securities and Exchange Commission (SEC) with no price range for the shares.
- In the first quarter of this year, the company’s net revenue increased by 118.8% yearly to RMB 1.5 billion. From 2019 to 2020, revenue increased 24% from RMB 3.9 billion to RMB 4.9 billion in 2020.
- From 2019 to 2020, the company narrowed its operational loss by 37% from RMB 731.8 million to RMB 458.8 million. It booked an operational loss of RMB 111.4 million in the first quarter of this year.
- Kerry Chen, the company’s CEO, said in a Friday investor letter that the company was long “misunderstood” as “a company that simply dismantles smartphones and re-purposes metals,” but it has since “set new industry standards” by standardizing a previously chaotic market.
- The proceeds raised from the offering will be used to develop technology, diversify service offerings, and the company’s online marketplace’s sales channels.
Context: The company was founded in 2011 as an online platform buying and reselling second-hand phones and other consumer electronics.
- In June 2019, Aihuishou acquired Paipai from JD.com. Paipai is an online retail platform that allows businesses to sell pre-owned products directly to consumers.
- The company entered into a partnership in May with the popular short-video app Kuaishou to reach the video-streaming platform’s massive user base.
- China’s second-hand electronics market is lucrative. In 2020, Chinese people bought and sold 189 million used devices, generating RMB 252 billion in gross merchandise volume, according to a report cited in the company’s IPO filing document.