Caixin
Dec 14, 2016 04:45 PM
FINANCE

Meitu IPO Prices at Bottom of Range

(Beijing) — Beauty app operator Meitu priced shares for its Hong Kong IPO at the bottom of their range on Wednesday, as investors remained skeptical about the future profit potential of the market's biggest new China internet listing in a decade.

Meitu shares priced at HK$8.50 apiece, or the bottom of their previously indicated range of HK$8.50 ($1.10) to HK$9.60. The pricing will allow the company to raise around HK$4.7 billion, well below its earlier $710 million target at the top of the range.

The company's shares will make their trading debut in Hong Kong on Thursday.

Founded in 2003, Meitu operates an app that lets users take selfies and then make modifications to improve their appearance. The app is very popular among young Chinese smartphone users, with 456 million active subscribers.

Despite that, Meitu has yet to find a way to monetize that big user base, leading to investor skepticism in the runup to the offering. The company's revenue reached 742 million yuan ($107.5 million) last year, up more than 50% from 2014. But 95% of that money came from sales of smartphones rather than money tied to its core app.

As its revenues have grown, Meitu's losses have also ballooned, to 2.22 billion yuan last year, up from 1.77 billion yuan in 2014.

In a bid to mitigate investor concerns, Meitu filed a revised IPO prospectus detailing plans to roll out an e-commerce platform before July that could help monetize its huge user base. If the platform does well, Meitu said it could break even by the end of next year.

Contact reporter Yang Ge (geyang@caixin.com)

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