Ebang Communications, a Chinese cryptocurrency mining hardware manufacturer, has recently filed its second draft for IPO at the Hong Stock Exchange (HKEX) as its first application failed to proceed.
In the revised filing, the company has shown a ‘significant decrease’ in Q3 2018’s revenue and gross profit. According to the stated figures, the company registered revenue worth $304 million (2.1 billion yuan), while for the entire year 2017, this figure was a mere $34 million (234 million yuan).
However, the firm stated that the average monthly sales figure took a massive hit in Q3 2018 due to a significant decrease in mining hardware demand. Though the company did not reveal the exact figures, it stated: “While the average new monthly contract value for purchase orders confirmed with BPU customers increased slightly during the second quarter, we have, since the third quarter of 2018, recorded a significant decrease in average new monthly contract value; we experienced significant decreases in revenue and gross profit for the three months ended September 30, 2018, compared to the preceding three months ended June 30, 2018.”
A risk factor
According to the HKEX’s listing requirements, any firm applying for an IPO listing should provide financial data for a period that ended not more than six months from the date on which the listing documents are submitted. Going by this rule, Ebang only had to produce its financial figures until June 2018.
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I just read an unverified claim that the Hong Kong Stock Exchange is hesitant to list any crypto mining companies b/c it doesn’t want to be the first exchange to do so.
But I recall the London Stock Exchange listing Argo Blockchain (a crypto mining company) in June. Any others?
— Katherine Wu (@katherineykwu) December 17, 2018
However, the dipping prices of cryptocurrencies since January have also become a risk factor for the IPO listing of any firm directly linked to the volatile sector. According to reports, HKEX recently called the blockchain industry ‘immature’ and is reluctant to list Bitmain, another Chinese crypto mining hardware manufacturer, on the exchange.
Ebang, which is rumored to have planned to raise $1 billion through an IPO, will have to disclose its financial figures of Q3 2018 in early 2019 if the firm further wants to proceed with the listing process.