Tencent-backed Automotive Service Platform Tuhu Car Debuts on Hong Kong Stock Exchange

Technology, Industrials, Automotive Author: Yuehan Li Sep 26, 2023 07:01 PM (GMT+8)

Tuhu Automotive Service becomes the first auto aftermarket company listed in Hong Kong and the largest TMT IPO in Hong Kong this year.

Tuhu raises a car

The prestigious listing occurred on September 26, with Tuhu Automotive Service (9690:HK)'s IPO set at USD 28 per share. A total of 1,827,700 shares were issued, generating net proceeds of USD 1.081 billion.

Among the main entities' support, Tencent, Castrol, LEAPMOTOR, Guoxuan High-Tech, and Shanghai Zizhu High-Tech Park acted as cornerstone investors, collectively injecting a substantial amount of USD 100 million into the project.

Shanghai Zizhu High-Tech Park committed to USD 5 million, while LEAPMOTOR and Guoxuan High-Tech each pledged to invest USD30 million. Tencent opted for a USD 25 million investment, and Castrol secured USD 10 million worth of shares.

For context, it's worth noting that this is Tencent's first entry into the Hong Kong stock market for non-medical investments in the last two years. Furthermore, LEAPMOTOR and Guoxuan High-Tech are leading entities in China's new energy vehicle sector and the power battery manufacturing industry. Their inclusion as cornerstone investors significantly boosts the subscription's weight.

This significant listing solidifies Tuhu's position as the top player in the automotive aftermarket sector of the Hong Kong Stock Exchange. Additionally, it distinguishes itself as the biggest IPO in the TMT (Technology, Media, and Telecommunications) industry in Hong Kong in 2023, and the eighth company to successfully raise more than USD 100 million.

After the initial public offering, Tencent will possess a significant 18.7% share in the business. Additionally, Joy Capital, Sequoia China, and FountainVest will hold 8.65%, 7.28%, and 5.26% respectively.

Founded in Shanghai in 2011, Tuhu is a platform focusing on after-car services and car maintenance, providing online reservations plus offline installation of car maintenance.

According to the prospectus, as of March 31, 2023, Tuhu has a 100.2 million registered users for its flagship app and online platform. In that same time period, the platform achieved an impressive average of 10.2 million monthly active users (MAUs), proving its dominance as the largest online community for car owners in China's automotive service provider market. Tuhu Auto Care's widespread service network is continuously growing, now comprising of over 4,700 Tuhu workshops and over 19,000 partner shops throughout the country. This expansion effectively covers the majority of prefecture-level cities.

Moreover, Tuhu has proficiently established a comprehensive nationwide warehousing and logistics system that seamlessly integrates self-operated infrastructure with third-party service providers. As of March 31, 2023, Tuhu operates a network of 39 regional distribution centers (RDCs) and 267 front-end distribution centers (FDCs) which extend its reach to over 300 cities throughout China. Tuhu's RDCs efficiently managed an average monthly receipt and delivery of 2.7 million tires and 13.1 million other auto parts during the three months ending on March 31, 2023.

Tuhu's revenue demonstrates remarkable growth, escalating from CNY7 billion in 2019 to CNY8.8 billion in 2020, according to its filed prospectus. This upward trend persists, with a remarkable 33.9% increase to CNY11.7 billion in 2021, before slightly leveling off to CNY11.5 billion in 2022. For the first quarter of 2023, the company reported a total revenue of CNY3.3 billion, reflecting an impressive 10% year-over-year growth rate.