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. On the legal side, like many Chinese firms seeking to tap U.S. The market opportunity for low end phones is growing only moderately as the industry is experiencing market saturation and, therefore, intense competition on price. Notably, the firm has not provided updated financials, so we have no visibility into more recent activity, especially important since the COVID-19 pandemic began well after the end of the firm's financial information. Its selling efficiency rate has also swung to negative territory. The firm's financials show a recent sharp drop in revenue and a swing to cash used in operations. public capital investment for its expansion initiatives to the U.S. The sole listed underwriter of the IPO is ViewTrade Securities. Management's presentation of the company roadshow is not available. Per the firm's most recent regulatory filing, the firm plans to use the net proceeds as follows: investors to minimize the administrative burden, so the lack of this feature is a negative signal.Īssuming a successful IPO at the midpoint of the proposed price range, the company's enterprise value at IPO would approximate $37.8 million.Įxcluding effects of underwriter options and private placement shares or restricted stock, if any, the float to outstanding shares ratio will be approximately 45.36%. UTME intends to sell 3.75 million shares of common stock at a midpoint price of $4.50 per share for gross proceeds of approximately $16.875 million, not including the sale of customary underwriter options.įoreign firms typically sell ADSs rather than common stock to U.S. UTime's recent financial results can be summarized as follows:īelow are relevant financial metrics derived from the firm's registration statement: Although phone manufacturers are optimistic about the prospects for 5G rollouts, a transition to that standard will likely occur over several years. 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. 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. The firm's financials are stale, so I'll be watching this IPO pass by. UTME has produced contracting revenue in an intensely competitive industry. The company is a manufacturer of lower cost mobile phones and related accessories. UTime ( NASDAQ: UTME) has filed to raise $17 million in an IPO of its common stock, per an amended registration statement.
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