New IPO $OG Onion Global China based fashion eCommerce MAy 11th

$OG Onion Global is a China based online fashion eCommerce marketplace. The company will list on May 11th selling shares at $7.25/share raising about $67.5M at about $600M Market Cap.

Onion Global, a Chinese E-commerce Platform, Eyes US IPO

$OG management is headed by founder and CEO Cong (Kenny) Li, who was previously founder of another e-commerce company, Hua Ning, and worked at Procter & Gamble China and Nike China.

$OG has received at least $128M from investors including Li Bai Global, Pingsan Bai, YGC Holdings, and ECSH Xianlv Limited.

$OG fresh, fashionable and future brands, which it refers to as the 3Fs across China and parts of Asia. 

Onion Global, a Chinese E-commerce Platform, Eyes US IPO

$OG has about 500K consumers who are influencers, over 2.1M active buyers on the platform & 15.5M registered consumers. They also have more than 4K brands in 24 product categories.

Cross-Border E-Commerce Site Optimises Supply Chain to Sharpen Competitive  Edge | hktdc research | HKMB - Hong Kong Means Business

The fashion market they are targeting is a subset of the apparel market focused on influencer-based marketing and is about $18B in Asia Pacific.

$OG had $584M in revenue (+41% YoY) at a Gross Margin of 20%, and grew gross profits 51% YoY to $119M. The operating margin was $39M (+6.7% YoY).

$OG has $40M in cash and will raise another $67M with $6M in Free cash flow for 2020.

Li Cong, the actual controller of the Onion Group, was rejected for the  production and sale of counterfeit drugs. He had sold counterfeit and  shoddy products. - iNEWS

At $600M Market cap and $40M in Operating margin they seem reasonably valued, relative to $CPNG, $FTCH and $SE, but $OG has much lower margins.

Recommendation

While I think this is an interesting company with a good brand, I am personally not buying shares at the IPO and have no interest until I see growth in other regions. Fashion as an eCommerce segment has tremendous competition in China as well.