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Key Takeaways:
Miduoduo has chalked up three years of losses ahead of its application for a Hong Kong IPO, but attributes that to costs associated with its recent business shifts
The provider of cross-border e-commerce marketing services says its strong revenue growth last year reflects a tie-up with TikTok and focus on Southeast Asia
It's a familiar story when startups head for the capital markets with a track record of losses. Cross-border e-commerce company Miduoduo Group Inc. was one of the latest cases in point when it applied for a Hong Kong listing last week.
The company reported losses of $16.4 million in 2023, $163,000 in 2024 and $24.5 million last year, on revenue of $70.9 million, $71.1 million and $138.1 million, respectively. Prior to rule changes introduced in 2018, the Hong Kong Stock Exchange probably would have simply dismissed Miduoduo's application due to its earlier requirements for two years of profitability before an IPO.
Adjusted for certain non-cash items, the company's bottom line looks better, with a net profit of $59,000 in 2023, followed by a loss of $87,000 in 2024 and a $2.3 million profit last year.
Despite that bumpy profit record, more is going on with Miduoduo that merits a closer look beyond its bottom line. For one, the company's latest backers include sovereign wealth fund Central Huijin Investment, whose fresh funding last year valued Miduoduo at HK$5 billion ($638 million).
The company is trying to position itself more like a hot high-tech startup rather than a 14-year-old player in the mature ad services industry, counting on its most recent embrace of the exploding market for outbound e-commerce selling goods from Chinese merchants to buyers in other countries.
It wants investors to see it not only as a marketing services provider, but also as an operator of its own direct cross-border e-commerce platform with a focus on Southeast Asia. It says it will use IPO proceeds to bankroll localization and e-commerce warehouses in four key Southeast Asian markets, Thailand, Indonesia, Vietnam and Malaysia. Its recent partnership with the popular TikTok short video site, which operates the TikTok Shop e-commerce platform, is also an important part of its ...
