Core Viewpoint - The China Securities Regulatory Commission (CSRC) has issued supplementary material requirements for 12 companies, including HaiMa Cloud, which is preparing for an IPO on the Hong Kong Stock Exchange. The CSRC has requested clarifications on the company's capital structure, control rights, and business operations [1][2][3]. Group 1: Company Background and IPO Process - HaiMa Cloud has submitted its IPO application to the Hong Kong Stock Exchange, with CICC and China Merchants Jinling International as joint sponsors [1]. - The CSRC has requested HaiMa Cloud to clarify its historical evolution, including any shareholding arrangements and compliance with regulations regarding shareholding changes [2]. Group 2: Capital Structure - HaiMa Cloud has seen significant changes in its shareholder structure, including the entry and exit of investors within a short timeframe, raising questions about the rationale behind the varying share prices and potential conflicts of interest [2]. - The company has multiple state-owned shareholders, and the CSRC has asked for updates on the identification of state-owned shares [2]. Group 3: Control Rights - The termination of certain special shareholder rights upon listing may significantly impact the company's control structure, particularly regarding voting rights [2]. - The potential decrease in voting power for a key shareholder post-IPO raises questions about the implications for control [2]. Group 4: Business Operations - HaiMa Cloud is recognized as the largest GPU as a Service (GPUaaS) provider for real-time cloud rendering in China, holding a market share of 17.9% in the cloud gaming sector [4]. - The company provides services across various industries, including gaming, digital entertainment, and education, supported by proprietary software and hardware [4]. Group 5: Financial Performance - HaiMa Cloud reported revenues of approximately 290 million RMB, 337 million RMB, and 520 million RMB for the years 2022, 2023, and 2024, respectively [4]. - The company has experienced losses of approximately 246 million RMB, 218 million RMB, and 186 million RMB during the same periods [4].

Core Viewpoint - Anhui Haima Cloud Technology, a leading provider of real-time cloud rendering services for cloud gaming in China, has submitted its prospectus for an IPO on the Hong Kong Stock Exchange, aiming to raise capital despite significant losses and low profitability metrics [1] Company Summary - Haima Cloud holds a 17.9% market share in China's real-time cloud rendering service market for cloud gaming, with a projected compound annual growth rate (CAGR) of 33.8% from 2022 to 2024, expecting revenue to reach 520 million yuan in 2024, reflecting a year-on-year growth of 54.4% [1] - Despite revenue growth, the company has reported net losses of 246 million yuan, 218 million yuan, and 186 million yuan over the past three years, totaling 650 million yuan in cumulative losses, indicating weak profitability efficiency [1] - The company's gross margin has been consistently low, with a peak of 26.6% in 2024, compared to an average gross margin of 56.6% for mid-sized gaming companies listed in Hong Kong [1][2] - The primary cost driver for Haima Cloud is computing power, which accounts for approximately 91.0%, 68.9%, and 89.4% of sales costs from 2022 to 2024, severely limiting gross margin improvement [2] Financial Health - The company has relied heavily on financing to support its operations, with net cash outflows from operating activities of 490 million yuan, 1.65 billion yuan, and 680 million yuan from 2022 to 2024, totaling 2.821 billion yuan [3] - Investment activities have also resulted in net cash outflows of 400 million yuan, 530 million yuan, and 340 million yuan during the same period [3] - Financing activities have provided net inflows of 465 million yuan, 2.185 billion yuan, and 1.066 billion yuan over the three years, indicating a dependency on external funding [3] Debt and Compliance Issues - As of the end of 2024, the company reported total assets of approximately 7.008 billion yuan and total liabilities of 2.057 billion yuan, resulting in a debt-to-asset ratio exceeding 293%, significantly higher than the industry average [5] - The company's short-term debt repayment capability is concerning, with current liabilities surging to 2.04 billion yuan, a 241% increase from 2023, and a current ratio of only 0.2, well below the healthy threshold of 1 [5] - Compliance issues have arisen, with the Ministry of Industry and Information Technology notifying the company in April 2025 for problems related to personal information collection and SDK information disclosure, which could jeopardize client relationships and require additional costs for rectification [5] Industry Outlook - The overall market size for real-time cloud rendering services in China is limited, with projections of only 2.6 billion yuan in 2024 and 11.6 billion yuan by 2029, while major players like Tencent and NetEase dominate the market with substantial internal capabilities [6] - The competitive landscape poses challenges for third-party platforms like Haima Cloud, as major internet and gaming companies can fulfill most of their rendering needs internally, constraining the growth potential for external service providers [6]