Core Insights - The company has a significant reliance on its top five customers, with their revenue contributions accounting for approximately 41.8%, 36.7%, and 35.3% of total revenue in 2022, 2023, and 2024 respectively [6][7] - The company ranks third among cloud communication service providers in China, holding a market share of 1.8% in 2024 [2][5] - The company's core business is centered around its CPaaS platform, which constitutes over 80% of its revenue [2] Financial Performance - The company reported revenues of approximately 810 million RMB, 916 million RMB, and 918 million RMB for the years 2022, 2023, and 2024 respectively [3][4] - Net profit for the company was approximately 75 million RMB, 77 million RMB, and 51 million RMB for the same years, showing a 2.5% increase from 2022 to 2023, followed by a 33.9% decrease from 2023 to 2024 [3][4] - The gross profit margins remained relatively stable, with gross profits of approximately 195 million RMB in 2022 and 2023, and increasing to about 203 million RMB in 2024 [4] Market Context - The total revenue of the Chinese cloud communication services market is projected to grow from 355 billion RMB in 2020 to 503 billion RMB in 2024, with a compound annual growth rate (CAGR) of 9.1% [5] - The company has registered 7 invention patents and 201 software copyrights related to its main business and services as of December 31, 2024 [5] - The company has served over 2400 enterprise clients in 2022 and 2023, with a slight decrease to 2100 clients in 2024 [6] Legal Matters - The company is currently involved in two related contract disputes concerning transactions with Beijing Yunxi Technology Co., Ltd. and Beijing Yakang Huanyu Technology Co., Ltd. [7] - A back-to-back transaction was established in January 2024, involving a purchase of disputed goods for 104 million RMB and a sale for 109 million RMB, with delivery deadlines that were not met [7]

Group 1 - The company plans to globally offer 30.44 million H-shares, with 3.044 million shares available for sale in Hong Kong and 27.396 million shares for international sale, along with an over-allotment option of approximately 15% [1] - The expected pricing range for the shares is between HKD 13.55 and HKD 15.15 per share, with the subscription period from June 30 to July 4, 2025, and the expected listing date on July 9, 2025 [1] - The company is the third-largest cloud communication service provider in China, holding a market share of 1.8% of the total revenue in the Chinese cloud communication service market for 2024 [2] Group 2 - The company has entered into cornerstone investment agreements, with cornerstone investors agreeing to subscribe for shares amounting to approximately HKD 131 million, assuming a mid-range offer price of HKD 14.35 per share [3] - The estimated net proceeds from the global offering are approximately HKD 391 million, which will be allocated as follows: 45.4% for service and solution development, 15.6% for expanding sales channels, 16.2% for acquisitions in China, 12.8% for repaying outstanding loans, and 10.0% for working capital and other general corporate purposes [3] - The company is one of the few in China capable of providing AI-driven communication services, with its core business being Communication Platform as a Service (CPaaS), which accounted for over 80% of its revenue during the historical period [2]

Group 1 - The company, Xunzhong Communication (02597), plans to conduct an IPO from June 30 to July 4, 2025, offering 30.44 million H-shares, with 10% allocated for Hong Kong and 90% for international sales [1] - The expected price range for the shares is between HKD 13.55 and HKD 15.15, with trading anticipated to start on July 9, 2025 [1] - The company is the third-largest cloud communication service provider in China, holding a market share of 1.8% of the total revenue in the Chinese cloud communication market for 2024 [1] Group 2 - For the IPO, assuming a median price of HKD 14.35 per share, the company estimates a net proceeds of approximately HKD 391 million, with allocations for service improvements (45.4%), sales channel expansion (15.6%), acquisitions in China (16.2%), loan repayments (12.8%), and working capital (10.0%) [2] - If the over-allotment option is fully exercised, the net proceeds could reach up to HKD 481 million at the highest price of HKD 15.15 per share [2] - The company has entered into a cornerstone investment agreement with Tongzhou International, where investors have agreed to subscribe for shares amounting to approximately HKD 131 million [2]

Core Viewpoint - Xunzhong Communication Technology Co., Ltd. is preparing for an IPO on the Hong Kong Stock Exchange after multiple unsuccessful attempts in other markets, indicating a strong desire for capital to support business growth and product upgrades [1][5][9]. Company Overview - Founded in 2008 by Park Seong-geun, Xunzhong Communication is a full-stack cloud communication service provider with over 25 years of experience in the IT industry [7]. - The company has undergone several rounds of investment, with major shareholders including Park Seong-geun (27.36%) and institutional investors like Lianchuang Innovation and Dongfang Huagai [7][9]. - Xunzhong primarily offers three types of solutions: Cloud Communication Services, Intelligent Communication Solutions, and Other Communication Solutions, with CPaaS being the core business [8][9]. Financial Performance - Revenue for 2022, 2023, and 2024 was approximately CNY 810 million, CNY 916 million, and CNY 918 million, respectively, showing stable but insufficient growth [9]. - Net profit decreased significantly in 2024, dropping over 30% year-on-year to CNY 50.64 million, attributed to asset impairment losses [9][10]. - The company has faced cash flow issues, with operating cash outflows for the past three years totaling CNY 117 million, CNY 56.21 million, and CNY 114 million [12][13]. Market Position - Xunzhong ranks third in China's cloud communication service market, holding a market share of 1.8% in 2024, with the overall market expected to grow from CNY 503 billion in 2024 to CNY 745 billion by 2029 [8][15]. - The competitive landscape is intense, with around 800 cloud communication service providers in China, and the top five accounting for approximately 20.9% of the market [15]. Challenges and Opportunities - The company faces challenges in maintaining profitability due to high telecom resource costs and increased accounts receivable [12][13]. - Despite these challenges, Xunzhong has opportunities in the digital economy, particularly in the tourism sector, leveraging AI technology to enhance service offerings [17][18].