Top KingWin Ltd (stock code: NASDAQ: TCJH) successfully listed on the NASDAQ on April 18, 2023. The company is a provider of education, support services related to capital markets, and consulting services in China. It mainly provides business training, corporate consulting, as well as consulting and trading services for entrepreneurs and executives of small and medium-sized enterprises. Frost & Sullivan (Frost & Sullivan, hereinafter referred to as 'Frost & Sullivan') provided exclusive industry advisory services for the listing of Top KingWin Ltd, and hereby warmly congratulate it on its successful listing.
Top KingWin Ltd (hereinafter referred to as 'Tencent Finance Group') successfully went public on April 18, 2023. The company plans to issue 2.75 million ordinary shares at a price of $4 per share, raising a total of $11 million.
During the process of listing in the US, 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 the overview, competitive advantages and strategy, industry overview, business, and other important sections), facilitating communication with the SEC and investors, helping investors quickly understand the market ecosystem and competitive landscape, and assisting the issuer in completing feedback on various industry-related issues from the SEC.
Investment highlights
The company has a highly qualified professional service team with rich experience in corporate training and consulting services;
The company's management team has extensive personal and business networks, which provide valuable potential customer sources;
The company has developed a comprehensive range of services aimed at meeting the ever-changing needs of customers and seizing different market opportunities;
The company has a strong network effect and can serve customers from different industries;
The company has established long-term cooperative relationships with local chambers of commerce, serving as a reliable source of leads to introduce services to potential customers.
Overview of China's Equity Investment Market
The Equity Capital Market (ECM) refers to the stage where companies raise funds by selling equity independently or with the assistance of financial institutions. It includes two types of stock markets: (i) the primary market, mainly involving private placements and initial public offerings (IPOs); (ii) the secondary market, which involves the sale of existing stocks of listed companies, as well as trading derivatives (such as futures and options). After the establishment of the Shanghai Stock Exchange (SSE) and the Shenzhen Stock Exchange (SZSE) about 30 years ago, China's equity capital market developed rapidly and is currently the world's second-largest equity market, nurturing a large number of financial businesses within China's prosperous equity market.
From 2016 to 2021, China's private equity fund industry experienced fluctuations but overall positive growth.
Specifically, from 2017 to 2019, China's economic growth was severely curbed due to domestic demand fluctuations, the trade war imposed by the United States, and stricter regulatory policies, which also dragged down the development of the private equity fund industry.
Since 2019, the government has issued a series of documents to promote the development of the private equity fund industry, encouraging private equity funds to invest in small and medium-sized enterprises. The development of the private equity fund industry has seen a significant rebound.
From 2016 to 2021, the number and fundraising amount of newly established private equity funds generally showed positive growth, with compound annual growth rates (CAGR) of 23.4% and 10%, respectively.
By the end of 2021, the annual investment amount and value of private equity funds reached RMB 755.9 billion (US$139.5 billion) respectively, with an annual compound growth rate of 6.2% and 13.8% from 2016 to 2021. These growth trends also indicate the active and positive development of China's private equity market.
Private Equity Investment in China, 2016 to 2021
Source: Frost & Sullivan report
Overview of the Business Training Industry in Chinese Enterprises
Corporate business training refers to the training services provided for clients with the aim of helping them formulate business strategies and solutions. It usually includes leadership training, corporate governance training, compliance training, investor relations training, and other items. From 2016 to 2021, the revenue of the Chinese corporate business training market experienced rapid growth, from 146.4 billion yuan (21.8 billion US dollars) to 289.7 billion yuan (43.1 billion US dollars), with an annual compound growth rate of about 14.6%. Driven by the increase in the number of enterprises and the growing awareness of businesses to participate in business training, it is expected that the revenue of the Chinese corporate business training market will grow at a compound annual growth rate of 10.4% from 2021 to 2026, reaching 475.3 billion yuan (70.7 billion US dollars) by the end of 2026.
Market scale of business training for Chinese enterprises by revenue
Forecast from 2016 to 2026
Source: Frost & Sullivan report
Market competition pattern of Chinese equity investment
The enterprise business training industry in China is a highly competitive and fragmented market. As of the end of 2021, there were over 20,000 enterprise business training platforms in China. It is expected that those enterprise business training service providers with comprehensive business relationship resources, professional training institutions (such as experts, scholars, and mentors), high-quality training services, and access to industry professionals will expand their market share.
The consulting and trading markets in China are highly competitive and fragmented. As of the end of 2021, there were over 500 trading consulting service providers in China. Trading consulting companies with rich experience in equity financing through listings or private placements, along with their growing brand awareness and reputation, as well as stable and strong business relationships, are expected to expand their market share and become leading market participants in the Chinese consulting and trading markets.
China equity financing industry
Key market drivers
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China's rapidly developing new economic industries
With continuous innovation in science and technology, China has seen a new economic wave in recent years. The Chinese economy is shifting from mainly focusing on traditional real estate investment and manufacturing to new economic industries, such as internet-driven or technology-driven industries. Currently, new economic industries have become an important driving force for China's economic growth.
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The capital available to enterprises is constantly increasing
In China, the increase in funds raised for private equity investments has supported potential capital for supporting the development of small and medium-sized enterprises (SMEs), making an important contribution to the development of the equity investment industry and the equity fundraising sector. In recent years, given the importance of SMEs to the Chinese economy, the Chinese government has deployed a large amount of resources to ensure the healthy and sustainable development of SMEs. For example: (i) The Beijing Stock Exchange (BSE) established a system for SMEs seeking capital injection in 2019, having already issued regulations on SME listing and investor qualifications; (ii) In China, it is expected that due to the impact of the registered IPO system, the complexity of listings will be greatly reduced, especially for SMEs, in other words, the exit channels for private equity investors will be improved. The ongoing reforms of China's capital market have increased the willingness to establish new private equity funds by expanding the exit channels for equity investors to monetize their investments.
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The demand for equity financing consulting services from small and medium-sized enterprises is on the rise
Small and medium-sized enterprises (SMEs) contribute more than 50% of tax revenue, 79.4% of employment, and over 60% of GDP, yet they lack the capabilities to match their contributions and cannot obtain sufficient financial resources. For a long time, Chinese SMEs have faced challenges in obtaining external equity financing due to limited business resources and experience in the equity market; they also face difficulties in obtaining external debt financing due to limited collateral, intangible intellectual property, and unstable cash flows. In alleviating these problems faced by SMEs, equity financing advisors are needed. Despite these difficulties, the demand for funds from SMEs is still on the rise.
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TradeGo, a subsidiary of Frost & Sullivan, has extensive research experience in the financial and business services industry. It has assisted well-known enterprises in successfully listing on the capital market. Successful listing cases include: 9636.HK's Jiu Fang Wealth, LICN.NASDAQ's Lichen China, 6686.HK's Noah Holdings, 2176.HK's Cadey Advisory, 6608.HK's B&R Cloud Innovation, 6989.HK's Excellence Business Services, 1179.HK's Huazhu, 1601.HK's Zhongguancun Technology Leasing, 9909.HK's Baolong Commercial, 8627.HK's Travel Orange Culture, 1922.HK's Yincheng Life Services, 8441.HK's International Yongsheng, 1895.HK's Xinyuan Property, 1915.HK's Taihao Small Loan, CIH.NASDAQ, 1905.HK's Haitong Hengxin, ATIF.NASDAQ, 8635.HK's Liancheng Technology, 3662.HK's Aoyuan Health, 2168.HK's Joyou Real Estate, 1835.HK's Ruiwei Asset Management, TradeGo (8017.HK), 8525.HK's Baiying Lease, 8223.HK's Ziyuan Yuan, 2003.HK's Weixin Jinko, 1806.HK's Huifu Tianxia, 8403.HK's Tianping Daohe, 8350.HK's Junyi Global Finance, 8469.HK's Shengye Capital, 1572.HK's China Art Finance, 8407.HK's Xingzheng International, 1606.HK's Bank of China Leasing.
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*The above order is not sequential and is arranged in reverse chronological order based on listing time.
