(Yicai Global) June 20 -- Meitu Network Technology Co., the developer of China's most popular selfie-editing mobile app, plans an initial public offering of shares in Hong Kong after seven years of financial losses.
The Xiamen-based company aims to go public by the end of this year and has appointed Morgan Stanley among others as its advisor. Meitu raised USD360 million through three rounds of financing in 2014, valuing it at USD2 billion, and expects the IPO to raise USD700 million for a valuation of about USD4 billion.
A leaked investment bank report on Meitu shows that it had a net loss of CNY690 million in 2015 on revenue of CNY750 million. Meitu refused to comment on the matter. Mr. Cai Wensheng, its entrepreneurial founder, has forecast profit next year. That may prove to be a challenge judging by its earnings performance so far.
Set up in 2008, Meitu ranks among the top Chinese app developers, but a huge user base has not translated into substantial profits. Its app 'Meitu Xiuxiu' is a social media tool for photo makeover and sharing, with nearly 500 million users in China.
According to Senior Vice President Bei Gou and CTO Zhang Wei, Meitu will be commercialized along three lines: advertising, games and e-commerce. How they plan to achieve this remains unclear.
Mr. Zhang has said the firm's technology would be able to tell any user's age and skin quality through a face recognition system, and data accumulation would allow cosmetic products to be recommended to users. That idea has already become a reality on another Chinese e-commerce platform.