Tubatu, a Chinese home furnishing platform, filed for an initial public offering on the Shenzhen Stock Exchange’s tech-focused Growth Enterprise Market (GEM) late last month.

Why it matters: Tubatu runs an online marketplace to connect customers, decoration companies, designers, and construction material providers. China’s domestic stock market is gaining traction among tech companies in China amid stricter scrutiny of US listings

  • Tech-focused markets, including Shenzhen’s GEM board and Shanghai Stock Exchange Science and Technology Innovation Board, are popular listing destinations for medium-sized tech firms, often leaders in smaller vertical markets.

Details: Tubatu plans to raise RMB 700 million ($108 million) by offering up to 60 million shares, according to its prospectus filed on June 30. The filing came three years after a failed attempt to go public in Hong Kong.

  • Tubatu said the raised funds will be used for improving technological capability, upgrading information systems, and expanding regional coverage, among others.
  • The firm’s revenue increased from RMB 583 million to RMB 680 million in 2018 to 2019, but that figure dropped to RMB 615 million in 2020 due to the negative impact of the COVID-19 pandemic.
  • The company’s net profit more than doubled between 2018 and 2020 to reach RMB 86.6 million.
  • Tubatu claims to serve about 114,000 renovation companies and 9,000 material suppliers currently.
  • Based on its IPO size, Chinese media expect the company’s market valuation to be around RMB 3 billion, much lower than the RMB 10 billion valuation cited in Hurun’s 2020 Global Unicorn Index.
  • Tubatu’s low market valuation comes from an over-reliance on online service revenues, such as matching landowners with decoration companies. Revenue from online services represented 99.94% of the company’s total revenue in 2020, up from 96.34% in 2019 after the company scrapped a low-profit home decoration service.

Context: Home furnishings is a big market in China, where apartments often come without finishes like paint, cupboards, or flooring. China’s online home decoration market reached RMB 400 billion ($61 billion) in 2020, according to data from research agency iiMedia.

  • The company also offers construction supervision services and Zhuangxiubao, a payment app that ensures customers only pay after satisfying renovations.
  • Founded in 2008, Tubatu has raised a combined $216.5 million in three rounds of financing, according to intelligence database Crunchbase. Its last round was in 2015 when it raised $200 million from Sequoia Capital, Matrix China, and 58.com in its Series C.
  • Qeeka Home, a rival of Tubatu, has seen its share price more than halved since it debuted in Hong Kong in 2018.

Emma Lee (Li Xin) was TechNode's e-commerce and new retail reporter until June 2022, when she moved to Sixth Tone to cover technology and consumption. Get in touch with her via lixin@sixthtone.com or Twitter.