Xunzhong raises $46.8 million through share placement at 19% discount

Chinese cloud services provider Beijing Xunzhong Communication Technology Co. Ltd. (2597.HK) said on Thursday it plans to place 11.19 million new shares at HK$28.20 apiece, representing a 19.43% discount to Wednesday’s closing price of HK$35. The placement is expected to raise net proceeds of about HK$314 million ($46.8 million), with the new shares representing about 8.42% of the company’s enlarged share capital.

Xunzhong plans to use about 90% of the proceeds to develop its newly established computing power operations business, including the purchase of AI training and inference servers, development of computing power platforms and products, procurement of flexible computing capacity, recruitment and market expansion. The remaining 10% will be used for general working capital.

Xunzhong Communications listed in Hong Kong in July last year at HK$13.55 per share, raising HK$367.5 million. As of the end of June, it had used 328.8 million yuan of the IPO proceeds, leaving only about 5.71 million yuan left.

The company’s revenue rose 19.1% year-on-year to 326 million yuan in the first half of this year, but its net profit fell 48.2% to 13.27 million yuan. Its gross margin declined by 1.62 percentage points to 20.13%. The company recorded a net operating cash outflow of 191 million yuan during the period, while its cash and cash equivalents stood at about 29.55 million yuan at the end of June.

Shares of the company opened higher on Thursday and were up 21.4% at HK$42.5 by the midday break.

By Lee Shih Ta

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