Good News on Listing | Frost & Sullivan Assists Yidian Cloud Co., Ltd. in Successful Hong Kong Listing (2416.HK)

Yidian Cloud Co., Ltd. (hereinafter referred to as "Yidian Cloud") successfully listed on May 25, 2023, with a global offering of 5,857.5 million ordinary shares, of which 96.5% were international offerings and 3.5% were Hong Kong public offerings, with an issue price of HK$10.19 per share.

During the process of this listing in Hong Kong, Frost & Sullivan mainly undertook the following tasks: helping the issuer accurately and objectively understand its positioning in the target market, using objective market data to discover, support, and highlight the issuer's competitive advantages, assisting the issuer, investment banks, and other intermediaries in completing the writing of relevant parts of the prospectus (such as overview, competitive advantages and strategy, industry overview, business, and other important chapters), helping the issuer complete communication with the Hong Kong Stock Exchange and investors, assisting investors in quickly understanding the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the Hong Kong Stock Exchange.

The company is a major comprehensive office IT solution provider in China;

The company's high customer retention has brought about a significant increase in revenue;

The company has industry-leading remanufacturing capabilities;

The company has a management team with market vision and rich experience.

According to a Frost & Sullivan report, based on 2021 revenue:

The company is the largest enterprise-level pay-as-you-go office IT service provider in China;

The company is the largest comprehensive office IT solution provider in China.

The number of Chinese enterprises has increased significantly from 3.03 million in 2017 to 4.88 million in 2021, with a compound annual growth rate of 12.6%. It is expected to climb to 84.0 million by 2026, with a compound annual growth rate of 11.5% from 2021 to 2026.

In 2021, the total number of Chinese small and medium-sized enterprises accounted for more than 99.8% of the total number of registered enterprises in China. With a stable economic environment and government support, Chinese small and medium-sized enterprises have developed rapidly. According to Frost & Sullivan data, the number of Chinese small and medium-sized enterprises increased from 3.03 million in 2017 to 4.88 million in 2021, with a compound annual growth rate of 12.7%. It is expected to reach 84.0 million by 2026, with a compound annual growth rate of 11.5% from 2021 to 2026.

Driven by digital transformation, Chinese enterprise IT spending has been growing steadily. According to Frost & Sullivan data, Chinese enterprise IT spending increased from RMB 2.6601 trillion in 2017 to RMB 3.2627 trillion in 2021, with a compound annual growth rate of 5.2%. It is expected to reach RMB 4.3498 trillion by 2026, with a compound annual growth rate of 5.9% from 2021 to 2026.

Other threats and challenges facing the classification of Chinese enterprise office IT services also include the negative impact brought about by COVID-19 and the rise of remote cloud office models. Due to the long-term effects and strict guidelines of COVID-19, social business growth may face more uncertainties, especially for small and medium-sized enterprises, due to their limited risk tolerance. The slowdown in enterprise growth will directly pose challenges to the Chinese enterprise office IT service market, leading to reduced available scale and budgets for enterprises. At the same time, as remote working methods are widely accepted, cloud office models may reduce employees' dependence on their own personal computers. However, due to strict regulations on internal network risk control, most companies still insist on using only enterprise-managed equipment to achieve good background supervision and monitoring.

According to service delivery models, the enterprise office IT service market can be further divided into direct buyout models and pay-as-you-go models. A direct buyout model usually refers to directly purchasing IT equipment and permanent software licenses from individual computer brands, software suppliers, and distributors. A pay-as-you-go model is usually a more flexible service model compared to the direct buyout model. It meets the needs of enterprises' demand-based business operations through pricing based on actual IT resource usage.

According to whether they provide managed IT services, the pay-as-you-go office IT market can be further divided into equipment leasing service categories and office IT comprehensive solution categories. Compared to equipment leasing services, which are difficult to meet the needs of enterprises for productivity and office IT operational efficiency, office IT comprehensive solution providers offer one-stop, stable, and flexible office IT services related to IT equipment usage, meeting the diverse office IT needs of customers and achieving agility and flexibility in business operations. In addition to the service scope of traditional equipment leasing service providers, office IT comprehensive solution providers offer comprehensive managed IT services to meet customers' expected service levels, covering hardware and software systems. Typical service packages include equipment configuration, equipment, engineer deployment, operation and maintenance support, performance optimization, and equipment management services, meeting the needs of customers at all stages of using equipment. As a single connection point for all enterprise IT needs, office IT comprehensive solution providers save enterprises the trouble of dealing with multiple office IT suppliers.

The growth of equipment leasing service categories is expected to approach stagnation, while office IT comprehensive solution categories will become an important growth engine for the pay-as-you-go office IT market. According to Frost & Sullivan data, the market scale of office IT comprehensive solution categories increased from RMB 400 million in 2017 to RMB 5.1 billion in 2021, with a compound annual growth rate of 95.4%. It is expected to reach RMB 36.1 billion by 2026, with a compound annual growth rate of 47.9% from 2021 to 2026.

According to a Frost & Sullivan report, the revenue of China's pay-as-you-go office IT service industry in 2021 was RMB 7 billion. The top five participants in China's pay-as-you-go office IT service industry accounted for a total market share of 25.4%. According to the same data source, in 2021, by revenue, Yidian Cloud ranked first in China's pay-as-you-go office IT service industry with a market share of 14.3%. In addition, by the dimensions of service equipment quantity and remanufacturing capabilities, Yidian Cloud also ranked first.

According to a Frost & Sullivan report, the revenue of China's office IT comprehensive solution industry in 2021 was RMB 51 billion. The top five participants in China's office IT comprehensive solution industry accounted for a total market share of 33.6%. According to the same data source, in 2021, by revenue, Yidian Cloud ranked first in China's office IT comprehensive solution industry with a market share of 19.6%.

Frost & Sullivan has rich research experience in the communications, media, and technology industries, assisting well-known enterprises to successfully list on the capital market. Successful listing cases include: Plessey (2486.HK), Liming Technology (2405.HK), Ohmyhome (NASDAQ:OMH), Kingsoft Cloud (3896.HK), Haoyun Technology (2440.HK), Duoxiangyun (6696.HK), Xuanwu Cloud Technology (2392.HK), Huitongda (9878.HK), iFlytek (2121.HK), SenseTime (0020.HK), Qinhuai Data (NASDAQ:CD), Mingyuan Cloud (0909.HK), Century Group (1849.HK), WeCom Group (2013.HK), Wancailianlian (1762.HK), AsiaInfo Technology (1675.HK), Hongya Holdings (1723.HK), Aurora Mobile (NASDAQ:JG), Cunguan Holdings (8606.HK), Qiyi Technology (1739.HK), WeBank (2003.HK), Tenpay (1806.HK), Atlinks (8043.HK), Zioncom (8287.HK), ISP Global (8487.HK), Vobile (3738.HK), Aibo Technology (2708.HK), iClick (NASDAQ:ICLK), Shengye Capital (6069.HK), Anlink International (8410.HK), AnKo Systems (8353.HK), Junmeng International (8062.HK), Feida (8342.HK), Future Data (8229.HK), and Asia Backup (8290.HK).