Recently, Bedo Finance exclusively learned that the cross-border marketing service provider Beijing Papaya Mobile Technology Co., Ltd. (hereinafter referred to as "Papaya Mobile") has confirmed that it will apply for listing on the Hong Kong Stock Exchange and is expected to submit the form in the first half of 2022. Prior to this, Papaya Mobile had successively submitted tables on the Shanghai Stock Exchange Science and Technology Innovation Board and the Shenzhen Stock Exchange ChiNext Board, but both chose to withdraw.
During this period, the management of Papaya Mobile also underwent changes. It is understood that the second board of directors of Papaya Mobile has ended in December 2021, and the board of directors has been adjusted. Among them, directors Zhao Jutao and Li Jinglun have both withdrawn in December 2021 and no longer hold directors positions.
Source: Papaya Mobile Prospectus.
According to the information, Zhao Jutao also concurrently serves as the secretary of the board of directors, deputy general manager and financial director of Papaya Mobile, and Li Jinglun is the product manager of Papaya Mobile. As an alternative, Liu Fan and Wang Peng joined the board of directors of Papaya Mobile, and shen si, Qian Wenjie and others jointly formed a new board of directors.
Not only that, Liu Fan has also newly become the chief financial officer (CFO) of Papaya Mobile. Not long ago, Liu Fan also participated in the brand upgrade of Papaya Mobile in this capacity. According to reports, Liu Fan is the initiator of the brand upgrade of Papaya Mobile, the founding partner of Dune Capital, and the founder of Beijing Entrepreneurship Commune.
Source: Papaya Mobile official website.
Bedo Finance learned that it is the practice of many brands to hand over the form to the Hong Kong Stock Exchange after completing the brand upgrade. In November 2021, Pocket Flying Sky was renamed "Flowing Cloud" to lay out the "Metacosm" field. On December 28 of the same year, Feitian Yundong submitted a listing application on the Hong Kong Stock Exchange.
For papaya movement, this operation is not unexpected. Prior to this, Papaya Mobile had submitted listing application materials to the Shanghai Stock Exchange's Science and Technology Innovation Board in March 2019, but it was withdrawn in July 2019 after two rounds of inquiries. Later, in July 2020, Papaya Mobile moved to the ChiNext board of the Shenzhen Stock Exchange, and also withdrew its application in February 2021 after two rounds of inquiries.
Previously, Papaya Mobile was listed on the New Third Board. Earlier, Papaya Mobile also planned to list in the United States and set up a red-chip structure, with Papaya Cayman as the main body to be listed. In early 2015, Papaya Mobile also approached the U.S. Investment Bank and selected the lead underwriter to list on the NASDAQ in the United States, but then abandoned the plan.
It is worth mentioning that the Shenzhen Stock Exchange also requested Papaya Mobile to "declare the Science and Technology Innovation Board in March 2019, withdraw the materials in July 2019, and issue a regulatory work letter in November 2019", and asked it to add an explanation of the difference between the audit materials on the Shenzhen Stock Exchange's ChiNext Board and the Science and Technology Innovation Board, and the implementation of the regulatory work letter and rectification.
In this regard, Papaya Mobile said that the issues involved in the termination of its sci-tech innovation board that were not fully and comprehensively verified included: (1) whether the disclosure of the main business content was comprehensive and objective; (2) whether the basis for industry division was sufficient; (3) dependence on important suppliers and the disclosure of the risk of going concern; and (4) whether important business data was consistent with public information.
According to Papaya Mobile's prospectus (filing draft) on the Growth Enterprise Market of the Shenzhen Stock Exchange, its operating income in 2017, 2018, 2019 and the first half of 2020 was 2.279 billion yuan, 4.328 billion yuan, 4.026 billion yuan and 1.928 billion yuan, respectively. Among them, in 2018, it increased by 89.89% year-on-year, and in 2019, it decreased by 6.97% year-on-year.
In response to the first round of inquiries from the Shenzhen Stock Exchange, Papaya Mobile said that the reason for the decline in revenue in 2019 was due to the adjustment of its customer structure. Among them, the sales revenue of application software and interactive entertainment customers grew rapidly in 2018, declined in 2019, and the proportion of e-commerce retail in 2019 increased from 27.85% to 53.60%.
In 2017, 2018, 2019 and the first half of 2020, the net profit of Papaya Mobile was 61.7645 million yuan, 83.447 million yuan, 89.2838 million yuan and 25.0175 million yuan, respectively, and the net profit attributable to the mother after deduction was 56.8137 million yuan, 83.4309 million yuan, 87.0997 million yuan and 21.8436 million yuan, respectively.
Source: Papaya Mobile Prospectus.
In terms of the first half of 2020 alone, the operating income of the papaya mobile period decreased by 383 million yuan, or 16.55%, compared with the same period in 2019; the net profit decreased by 9.5326 million yuan or 27.59% compared with the same period in 2019, mainly due to the impact of the new crown epidemic.
In 2017, 2018, 2019 and the first half of 2020, the gross profit margin of Papaya Mobile was 6.24%, 4.38%, 4.64% and 3.86%, respectively. Papaya Mobile explained that the fluctuation in gross profit margin was mainly affected by the increase in the proportion of search display advertising revenue, while the gross profit margin of search display advertising was lower than that of performance advertising, resulting in a decline in its overall gross profit margin.
In terms of equity structure, according to the prospectus, the shares of the company held or controlled by Shen Si and Qian Wenjie (co-actors), the actual controllers of Papaya Mobile, accounted for 76.81% of the total share capital of the company before the issuance. After the successful issuance, Shen Si and Qian Wenjie hold or control 57.61% of the equity, and are still in an absolute controlling position.
Among them, Shen Si, founder, chairman and general manager of Papaya Mobile, directly holds 49.67% of the shares, while indirectly holding 6.99% of the company's shares through Weimei Pumpkin, Winter Melon Technology and Papaya Network; Qian Wenjie, co-founder and chief technology officer of Papaya Mobile, directly holds 20.15% of the company's shares.
Bedo Finance learned that The main competitor of Papaya Mobile, Feishu Shennuo, is also planning to list on the Hong Kong Stock Exchange. In April 2021 and October 2021, Feishu Shennuo twice submitted the form on the Hong Kong Stock Exchange, but has not yet passed the hearing. It is understood that Feishu Shennuo is positioned as a digital marketing platform for going overseas.
Papaya Mobile once said in the prospectus that before it obtained Facebook's first-class agency qualification in 2016, it had conducted Facebook channel advertising through Feishu Interactive (i.e. "Feishu Shennuo"). After verifying the "Customer Cooperation Framework Agreement" signed by the two parties in early 2016, Papaya Mobile gave Feishu Interactive less than 1% of the concession during the cooperation with Feishu Interactive.
Source: Papaya Mobile Prospectus.
In 2018, 2019 and 2020, Feishu Shennuo's revenue was $34.032 million, $63.252 million and $59.491 million, net profit was $1.326 million, $9.707 million and $4.592 million, and adjusted net profit was $8.913 million, $19.551 million and $8.173 million, respectively.
According to iResearch's report, in terms of total transactions in 2020, Feishu Shennuo ranked first among China's digital marketing service providers with a market share of 20.5%, with a market share of US$3.8 billion. During the same period, Company A (or Blue Label) came in second with a total transaction value of $3.7 billion, with a market share of 20.4%.
Source: Feishu Shennuo Prospectus.
This means that the distance between Feishu Shennuo and the second place has not been widened, and it may be surpassed at any time. According to the prospectus of Feishu Shennuo, company B (which is a digital marketing service provider and the cooperation form with Facebook is an agent) is Papaya Mobile, with a total transaction volume of $1.9 billion in 2020 and a market share of 10.4%.
According to the official website of Papaya Mobile, the company is the top agent of Facebook and Google China.