The Latest: Shares of civil service education services provider Fenbi Ltd. (2469.HK) opened at HK$10.50 in their Monday trading debut, 6.1% higher than their IPO price of HK$9.90, which was the upper end of its price range.

Looking Up: The local portion of the company’s public offering in Hong Kong was oversubscribed by about 33 times, raising HK$120 million ($15.4 million) in net proceeds.

Take Note: Fenbi is still in the red with a net loss of 2.05 billion yuan ($300 million) in 2021. The company recorded another loss of around 392 million yuan in the first half of 2022 due to continued expansion of its classroom-based tutoring and disruptions caused by the Covid pandemic.

Digging Deeper: Fenbi, whose name means “chalk” in Chinese, was formerly part of an online learning unicorn, defined as a company worth more than $1 billion, before the Chinese government began cracking down on private tutoring services providers. It was hived off as an independent entity in 2020 to focus on tutoring for China’s civil service examinations, and enjoys a leading position in online education for aspiring professionals. Its online platform has 43 million registered users, and its average monthly active users rose from 6.5 million in 2021 to about 7.5 million at the end of June in 2022. Tutoring for takers of China’s civil service exams accounted for around 67% of its revenue in the first half of 2022.

Market Reaction: Fenbi’s stock continued to rise after the open and was up 13.9% at HK$11.28 by the midday trading break on Monday.  

Reporting by Chan Ka Po

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