This is a legal gray area that brings the risk of management changing the terms of the contractual agreement or the Chinese government altering the legality of such arrangements. investors would only have an interest in an offshore firm with contractual rights to the firm’s operational results but would not own the underlying assets. markets, the firm operates within a VIE structure or Variable Interest Entity.U.S. On the legal side, like many Chinese firms seeking to tap U.S. The market opportunity for low end phones, as part of the larger 4G market, is growing only moderately as the industry faces intense competition and saturation within the 4G standard. Selling expenses as a percentage of revenue have been uneven its Selling efficiency rate is in negative territory. However, the company’s financials show a firm in sharp revenue contraction and a swing to cash use in operations. IPO to fund its expansion plans in emerging markets. The sole listed bookrunner of the IPO is ViewTrade Securities. Management’s presentation of the company roadshow is not available. We plan to use the net proceeds of this offering primarily for general corporate purposes, which may include funding the exploration of the Indian market and other emerging markets as part of our strategy for expanding our local distribution network, performing more research and development activities to launch new products and other general and administrative matters. Management says it will use the net proceeds from the IPO as follows: UTime intends to raise $24 million in gross proceeds from an IPO of its common stock, although the final amount may differ. UTime’s recent financial results can be summarized as follows:īelow are relevant financial metrics derived from the firm’s registration statement:Īs of September 30, 2019, UTime had $454,000 in cash and $19.2 million in total liabilities.įree cash flow during the twelve months ended September 30, 2019, was negative ($1.1 million). This represented an annual average growth rate of 5.0% from 2014 to 2019 and a 3.2% growth in 2019.Īlthough the industry has grown rapidly from 2013 forward as a result of the popularity of the 4G mobile phone standard, growth has slowed more recently as the market has attained saturation.Although phone manufacturers are optimistic about the prospects for 5G rollouts, a transition to that standard will likely occur over several years. Source: Company registration statement Market & CompetitionĪccording to a 2019 market research report by IBISWorld, the market for mobile phone manufacturing in China was expected to reach $232 billion in 2019. The Selling efficiency rate, defined as how many dollars of additional new revenue are generated by each dollar of Selling spend, was negative (9.0) in the most recent reporting period, as shown in the table below: Selling expenses as a percentage of total revenue have been uneven as revenues have decreased, as the figures below indicate: UTME has relationships with companies such as TCL Communication Technology, Haier Electronics and Quality One Wireless. The firm sells primarily as an OEM/ODM contract manufacturer to brands that are active in emerging markets The company is majority owned and controlled by Chairman Bao, who owns 96.95% of company stock pre-IPO. Minfei Bao, who has been with the firm since 2008 and was previously general manager of United Creation Technology, Ltd., a mobile phone manufacturer. Management is headed by Chairman and CEO Mr. The company is also developing its own branded product offerings through its UTime and Do brands. Shenzhen, China-based UTime was founded to provide a range of design, development, production and sales of lower cost mobile phones, accessories and related electronic products for sale to emerging markets and the entry level within developed markets. I’ll provide an update when we learn more about the IPO from management. UTME has produced sharply contracting revenue as it focuses on a saturated industry and low-end mobile devices. The firm is an OEM manufacturing company for low-cost mobile devices for brands selling primarily to emerging markets. UTime Limited ( NASDAQ: UTME) has filed to raise $24 million in an IPO of its, according to an F-1 registration statement.
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