F-1/A: Zhibao Technology Inc. Eyes Nasdaq Listing with 1.2 Million Share IPO

Zhibao Technology Inc., a Cayman Islands-based InsurTech company, is set to launch its initial public offering, offering 1.2 million Class A ordinary shares to list on the Nasdaq Capital Market.

Summary

• Zhibao Technology Inc., a Cayman Islands holding company, is planning an IPO to list on the Nasdaq Capital Market under the ticker symbol ZBAO.
• The company will offer 1,200,000 Class A ordinary shares, with an expected initial public offering price between $4.00 and $6.00 per share.
• Zhibao operates primarily through its PRC Subsidiaries, focusing on digital insurance brokerage services with a 2B2C embedded insurance model.
• The company has applied for and completed a cybersecurity review with respect to its proposed overseas listing pursuant to the Cybersecurity Review Measures (2021 version).
• The company has completed the filing procedures with the CSRC under the Trial Measures.
• For the fiscal year ended June 30, 2023, Zhibao's revenue reached approximately RMB 142.1 million (US$19.6 million), a 31% increase from the previous year.
• The company incurred a net loss of approximately RMB 43.1 million (US$5.9 million) for the fiscal year ended June 30, 2023, including RMB 54.7 million ($7.5 million) in share-based compensation expenses.

Sentiment

Score: 6

Explanation: The document presents a mixed sentiment. While the company shows revenue growth and operates in a promising industry, it also faces regulatory risks, incurred a net loss, and has a complex corporate structure. The sentiment is neutral, reflecting both positive and negative aspects.

Positives

• The company's revenue increased by 31% for the fiscal year ended June 30, 2023.
• Zhibao has pioneered a 2B2C embedded insurance model, positioning it as a market leader.
• The company has completed the required procedures with the CSRC and the Cybersecurity Review Office (CRO).

Negatives

• The company incurred a net loss of approximately RMB 43.1 million (US$5.9 million) for the fiscal year ended June 30, 2023, although this includes a one-off share-based compensation expense.
• The company is subject to regulatory risks associated with operating in China, including potential interventions by the PRC government.
• The company is exposed to potential delisting under the HFCA Act if the PCAOB cannot inspect its auditor for two consecutive years.

Risks

• The company's Class A ordinary shares may be delisted under the HFCA Act if the PCAOB cannot inspect its auditor.
• Changes in PRC government policies or relations between China and the United States could adversely affect the company.
• Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit legal protections.
• The PRC government may intervene or influence the company's operations and this offering.
• Failure to protect private information of customers could have a material adverse effect on the company.
• The company may rely on dividends from its PRC Subsidiaries, which could be restricted.
• The CSRC has recently released the New Overseas Listing Rules for China-based companies seeking to conduct overseas offering and listing in foreign markets, effective as of March 31, 2023.
• Substantial uncertainties exist with respect to the requirement of National Financial Regulatory Administration and how it may impact the viability of our current corporate structure, corporate governance and business operations.

Future Outlook

The company intends to grow its business by expanding B channels, increasing its sales force, driving additional conversions for existing end customers, upgrading its digital insurance solutions and PaaS, expanding the scale of the MGU business, and exploring M&A opportunities.

Industry Context

The digital insurance brokerage services industry in China is experiencing rapid growth, particularly in the 2B2C segment, driven by supportive government policies, technological advancements, and changing consumer preferences.

Comparison to Industry Standards

• According to the Frost & Sullivan Report, Zhibao China Group ranked number one in the 2B2C digital insurance brokerage services sector in China, with a market share of approximately 17.4% and a revenue of approximately RMB140.6 million in 2022.
• The 2B2C digital insurance brokerage services sector is the fastest growing segment within the digital insurance brokerage service industry, with a historical compound annual growth rate (CAGR) of approximately 54.6% from 2018 to 2022, which also presents a substantial growth potential to reach approximately RMB6.2 billion in 2027, with an estimated CAGR of approximately 50.1% from 2022 to 2027.

Stakeholder Impact

• Shareholders: Potential for capital appreciation and dividends (though not expected in the near future), but also risk of price volatility and regulatory changes.
• Employees: Potential for career growth and development within a growing company.
• Customers: Access to innovative and customized digital insurance solutions.
• Insurance Companies: Opportunity to expand their reach and product offerings through Zhibao's platform.

Next Steps

• The company aims to list its Class A ordinary shares on the Nasdaq Capital Market.
• The company intends to use the net proceeds of this offering for R&D, developing new insurance solutions, establishing a Lloyds syndicate, sales and marketing, business expansions, and working capital.

Key Dates

Keywords

IPO, Zhibao Technology, InsurTech, China, Nasdaq, Insurance brokerage, 2B2C, Overseas listing, CSRC, Cybersecurity Review