Yesterday Ant Group, formerly Ant Financial, filed its preliminary Hong Kong IPO prospectus. The company is going for a dual listing in Hong Kong and Shanghai. The prospectus paints a picture of a fast growing company with more than a billion annual users for its services, with Alipay as the key brand. Alibaba and Ant founder Jack Ma is not a man to bet against. However, the real question is how much is Ant Group worth? It’s rumored to be hoping for a $200 billion valuation. We scratched just a little below the surface and came away with some questions.
Some of the key figures are extremely impressive. The prospectus shows revenues for the six months to June up 38% to RMB 72.5 billion ($10.9bn) and the profit for the first half of RMB 21.9 billion ($3.29 bn) outstripping the profit for the whole of 2019. However, if the comparison is against the second half of 2019, the revenue growth is a more tepid 6.5% and profit is up 35% still very strong figures.
We boiled down these 2020 improvements to three factors. There was significant growth in lending and non-payment revenues, Ant pulled back on marketing spending, and a curious drop in transaction cost percentage, which is Ant’s largest expense.
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