English version translated by XU Xinyuan (Wayne)

Recently, the Hong Kong Exchanges (HKEX) official website shows that the online audio platform Ximalaya has updated its prospectus documents, which is the third time that Ximalaya has filed its IPO prospectus. In April 2021, Ximalaya filed IPO prospectus with the SEC, but Ximalaya later voluntarily withdrew it, and turned to the Hong Kong Exchanges in September 2021.

On April 13, 2022, LANDING Partner Mr. FANG Xu accepted an interview by Sohu.com on the topic of Ximalaya’s 3rd IPO, delivering detailed professional interpretation in plain language.

Mr. Fang stated that in Jan. 2020, LIZHI (LIZI.US) was listed on Nasdaq as the first long audio stock, but its business model was not preferred by the capital market and its stock price plunged after IPO. Ximalaya was founded during the online audio industry boom, which is similar to LIZHI (LIZI.US) in its business model. LIZHI’s unwelcome reflection on Nasdaq became an important motivation for Ximalaya to voluntarily withdraw its listing application for the first time. Mr. Fang pointed out that Ximalaya initially chose to go to the U.S. market, mainly because NASDAQ, the global mainstream capital market, was more receptive to new business models, which might lead to a higher valuation. However, with LIZHI’s market value falling sharply, which shared the similar business model with Ximalaya, the Nasdaq was no longer wise option.

In the interview, Mr. Fang, indicated that Ximalaya’s second prospectus was returned by the HKSE, mainly because its listing financial data did not meet the HKSE's requirements. He further analyzed that the HKSE had listing requirements on revenue, cash flow or profit. Once the IPO enterprise met one of the listing standards, it can be listed. For example, regarding the profit, the enterprise must make profits of least 80 million HKD in three years. In the case of Ximalaya, it did not met the profit standard because it had been in the red. However, Ximalaya’s revenue data met the standard. Last year, its revenue reached 5.8 billion RMB, so it can only refer to another standard to seek for the opportunity to be listed.

In Mr. Fang’s opinion, going public can not only raise funds, but also facilitate enterprise financing. After IPO, the equity will have a fairer value, which is convenient for the company or shareholders to pledge equity for financing. Ximalaya has to suffer down-round IPO after turning to HKSE, but going public is still the best choice in the current situation. Once listed successfully, Ximalaya can get ‘a moment of respite’.