On January 9th, Fenbi Limited (hereinafter referred to as "Fenbi" or "the Company") was listed on the main board of the Hong Kong Stock Exchange with the stock code 02469.HK. The issue price was HK $9.9 per share, and the shares were traded in units of 500 shares per lot. The proceeds from the global offering were approximately HK $120 million. As of 9:50 a.m. on January 9th, Fenbi's opening price rose by more than 10%, with a total market value of approximately 23.196 billion Hong Kong dollars.
The scene of the Hong Kong listing celebration ceremony of Fenbi Co., LTD
Fenbi is a well-known provider of non-academic vocational education and training services in China, dedicated to popularizing high-quality non-academic education and training services through technology and innovation. Citigroup, China Gold Online (Hong Kong), and Bank of America Securities are the joint sponsors, and well-known investment institutions such as Tencent, IDG, Matrix Partners, and Hillhouse Capital are all among the shareholders.
Mr. Zhang Xiaolong, the founder, chairman and CEO of Fenbi, said, "The company's listing not only means that the stocks can be traded, but more importantly, it indicates that we have gained recognition from all aspects. At the same time, it will also bring greater popularity and higher credibility to the company." Becoming a public company is both an honor and a responsibility. In 2023, we will provide better products and services, adopt a more responsible attitude, serve our users well, create better and more social and economic value, and repay our users and society who support us.
It is learned that Fenbi will use 52% of the funds raised this time to enrich the course content and expand the student base, 28.5% to enhance the content and technology development capabilities, 12% mainly for marketing activities of newly developed courses, and 7.5% for working capital and other general corporate purposes.
The shares were oversubscribed and the brand was recognized by the market
According to the announcement, Fenbi has been listed on the Hong Kong Stock Exchange with an offering price of HK $9.9 per share. A total of 20 million shares will be offered globally, with 10% for Hong Kong and 90% for international offerings. Additionally, there is an over-allotment option of 15%.
In the previous subscription stage, Fenbi gained favor from both Hong Kong and international investors thanks to its unique technological advantages and good reputation. From the initial public offering (IPO) of Fenbi on December 23, 2022 to the deadline of December 30, 2022, the Hong Kong offering shares tentatively offered in the Hong Kong public offering have been oversubscribed, which is approximately 33.88 times the total of 2 million Hong Kong offering shares tentatively available for subscription in the Hong Kong public offering. The shares offered in the initial international offering have been oversubscribed, equivalent to approximately 2.32 times the total 18 million shares available for subscription in the initial international offering. Fenbi has received high recognition from the market.
Not only that, Fenbi has also gained a good reputation in the user market, thereby reducing the company's customer acquisition costs. The prospectus reveals that in the survey of all recruitment examination service providers, 58.7% of the respondents regarded chalk as their preferred option. Frost & Sullivan's survey confirmed that 47.5% of the survey participants who purchased Chalk's services and products were recommended by their classmates and friends, and 93.6% of the participants were willing to recommend Chalk's products and services to others.
The high brand recognition has enabled Fenbi to develop rapidly. According to the prospectus, the core revenue of Fenbi comes from three major segments: online training, offline training, and the sales of teaching materials and tutorial materials. In 2019, 2020 and 2021, Fenbi achieved total revenues of 1.16 billion yuan, 2.132 billion yuan and 3.429 billion yuan respectively. The compound annual growth rate of its revenue from 2019 to 2021 was as high as 71.93%, demonstrating a strong growth rate. According to a report by Frost & Sullivan, the compound annual growth rate of China's vocational examination training industry from 2016 to 2021 was 16.3%, and the revenue growth rate of Fenbi was much higher than that of the industry.
Technological innovation and the demands of students have become the "dual engines" driving business development.
Fenbi once publicly stated that the core goal of the company's development is to shorten the learning chain for users and better serve them. Therefore, since its establishment, every step taken by Fenbi has been very "solid", and every technological innovation has been aimed at meeting the increasingly diverse learning needs of users.
The prospectus shows that Fenbi launched a comprehensive online mobile application for the recruitment examination and training industry in China in 2013. The average monthly active users increased from approximately 2.9 million in 2019 to approximately 4.7 million in 2020, then to approximately 6.5 million in 2021, and further to approximately 7.5 million in the six months ending June 30, 2022. It dominates the industry in terms of scale and provides convenience for more users.
In September 2014, Fenbi launched a systematic training course for public service examinations through online channels and, relying on its self-developed RTC live streaming system, solved the problem of geographical restrictions on users' learning. The RTC live streaming system can support over 100,000 students in a single class to provide large live classes with a delay of less than 500 milliseconds, making it a first in the industry.
In March 2015, the large-scale online mock examination system "Fenbi Mock Test" launched by Fenbi was also highly favored by users. This system can automatically generate the scores and percentage rankings of the participants one minute after the mock exam ends, allowing the participants to understand their progress, set target positions and formulate targeted learning strategies. As of June 30, 2022, Chalk has held various online mock exams for a total of 45.9 million participants.
In June 2015, Fenbi also launched a domestic comprehensive online question bank, which has always been at the forefront of the industry in terms of question explanation and the design of mock exam questions. According to the prospectus, as of June 30, 2022, the question bank of Fenbi had approximately 2.3 million questions in total. Students conducted about 1.9 billion online exercises through the platform, with a corresponding number of exercises exceeding 30.9 billion.
In addition, Fenbi has successively carried out research and development projects in big data, artificial intelligence, OCR and cloud technology, etc., to solve the technical problems encountered in the development process and ensure the smooth progress of new product research and development.
In addition to constantly making breakthroughs in technology, Fenbi is also continuously innovating in terms of course types. The prospectus shows that with the support of a content development team of 249 experts, Fenbi has internally developed the vast majority of its content, including course Settings and teaching materials. The "System Class" product launched in September 2014 has become a highly cost-effective product in the minds of users. In addition, Fenbi has launched the "Beginner Training Camp" product to meet the practice needs of students, effectively enhancing users' enthusiasm for learning. The "Premium Class" product launched in June 2020 moved the offline small-class format to the online platform, providing more refined services to meet the diverse learning needs of students. In the first half of 2022, the number of paying users for online premium courses rose by 96.2% to 104,000.
There are many favorable conditions in the field of vocational education and the market prospects are broad
Recently, a series of policies clearly supporting the development prospects of vocational education have been successively introduced, providing positive factors to drive the share prices of related education stocks, which have risen strongly.
On December 21, 2022, the General Office of the Central Committee of the Communist Party of China and The General Office of the State Council issued the "Opinions on Deepening the Reform of the Modern Vocational Education System", which requires deepening the supply-side structural reform of vocational education and proposes to place promoting the high-quality development of modern vocational education in a more prominent position.
On December 14, 2022, the "Outline of the Strategy for Expanding Domestic Demand (2022-2035)" issued by the Central Committee of the Communist Party of China and The State Council was released to the public. It once again mentioned "supporting and regulating the development of private education", which also led to a encouraging rally in the education sector of the Hong Kong stock market.
According to a research report by CITIC Securities (22.25, -0.20, -0.89%), the "Opinions on Deepening the Reform of the Modern Vocational Education System Construction" document further provides support for the development of vocational education from the fields of capital, talent, and industry, and continues to affirm the role of capital in the development of vocational education. Following the mention of "supporting and regulating the development of private education" in the "Outline of the Strategy for Expanding Domestic Demand (2022-2035)", this document is expected to further strengthen the market's investment confidence in the vocational education sector, and the sector's valuation is expected to continue to recover.
According to public data and information, China has currently established a very large-scale vocational education system. The new Vocational Education Law, which came into effect in May 2022, clearly stipulates in legal form that "vocational education is an educational type of equal importance to general education", affirms the significance of vocational education, and marks that the construction of China's modern education system has entered the stage of legalization.
The frequent introduction of favorable policies has rejuvenated the vocational education market, and the prospects of the non-academic vocational education and training market are widely recognized.
According to a report by Frost & Sullivan, China's non-academic vocational education and training, including vocational examination training and vocational technical training, is expected to reach a market size of 110.2 billion yuan in 2026 in terms of revenue. The penetration rate of recruitment examination training services in China is projected to increase from 25.6% in 2020 to 28.9% in 2026. In 2021, Fenbi ranked second in China's vocational examination training industry with a 4.3% market share.