Tuhu Car Inc, a Tencent-backed Chinese online and offline car services platform, has won the Hong Kong stock exchange’s approval for its planned initial public offering (IPO) amid the exchange operator’s efforts to attract new economy and technology issuers.
Shanghai-based Tuhu, whose shareholders include Tencent Holdings and venture capital (VC) companies Joy Capital and HongShan (previously known as Sequoia Capital China), passed the so-called listing hearing on Wednesday.
The IPO could see Tuhu, which has over 100 million registered users, become the latest company listing in Hong Kong with weighted voting rights.
Since the city’s first such listing by Xiaomi Corp in July 2018, the exchange’s series of listing rule reforms in recent years have opened the gates to companies from pre-revenue biotech issuers to secondary listings, and more recently, tech specialist applicants.
As of end-March 2023, 260 new economy companies have listed in Hong Kong since its 2018 reforms, raising a combined HK$916.5 billion ($116.9 billion).
Tuhu has yet to reveal its pricing terms and targeted IPO size. Its valuation was estimated at 30 billion yuan ($4.1 billion) as of the end of 2022 by Hurun Research Institute, a Shanghai-based research and media group.
Having filed its prospectus in late March, the firm is moving forward with its third attempt to go public in Hong Kong. It had submitted a listing application in January 2022, and again, in August 2022 but only to see them lapse.
Founded in 2011, Tuhu started as a pure online retail platform providing a range of automotive products before it evolved over time to become an integrated online and offline car services platform.
Its platform primarily serves passenger vehicles sold in China, with a range of automotive services from tires and chassis parts replacement to auto maintenance, repair, detailing, and more.
The Chinese market of automotive services is expected to grow at a compound annual growth rate (CAGR) of 9.3% to 1.9 trillion yuan ($260.9 billion) by 2027 from 1.2 trillion yuan in 2022, according to a report by China Insights Industry Consultancy (CIC), cited in Tuhu’s prospectus.
Tuhu’s latest listing endeavour looks more promising with the firm booking 214 million yuan ($29.4 million) in adjusted net profits in the first six months of 2023 after years of losses. Its revenue in H1 reached a record high of over 6.5 billion yuan ($893.1 million), up 19.3% compared with the same time last year, according to its prospectus.
The firm turned a profit after four consecutive years of losses. It booked losses of 3.4 billion yuan, 3.9 billion yuan, 5.8 billion yuan, and 2.1 billion yuan ($288.6 million) in the years from 2019 to 2022, respectively.