First listed bike-sharing company pedals to victory

Parked Youon shared bikes on a street in Luoyang, Henan province. PROVIDED TO China Daily

Changzhou Youon shares sprint to put on big gains as stock starts trading

Changzhou Youon Public Bicycle System, the nation's first listed bike-sharing company, sprinted ahead and took line honors in its first trading day in Shanghai on Thursday.

Listed on the Shanghai Stock Exchange with an issue price of 26.85 yuan ($4) per share, Changzhou Youon started trading at 32.22 yuan per share on Thursday, and halted trading for the price instantly reached 38.66 yuan, which exceeded the daily price increase limit of 10 percent.

Based on its closing price, Youon's market capitalization was 3.7 billion yuan on day one. Sun Jisheng, founder of Youon who holds 35.72 percent of the company, saw his personal wealth swell to 1.3 billion yuan.

However, Thursday's good fortune still does not qualify him to enter the benchmark Hurun Rich List, which monitors the ups and downs of Chinese billionaires. The threshold for last year's list was 2 billion yuan.

Zhang Xu, a senior analyst at Beijing-based internet consultancy Analysys, said the surge of Youon on its first trading day may not reflect investors' confidence in its business model－but rather a common phenomenon for most of the companies newly listed on China's A-shares market.

Founded in 2010, Youon has attracted 20 million users nationwide and has rolled out 890,000 public bikes in over 210 Chinese cities and counties.

Unlike its better-known rivals Ofo and Mobike, which provide dockless bikes with smart locks, Youon specializes in public bikes with fixed locking poles and designated parking lots, most of which are operated in cooperation with local governments. Also, Youon has reported profit for three consecutive years since 2014, while the other two are still waiting to go into the black.

According to its half-year results to June 30, released on Wednesday, the company posted sales of 474 million yuan, up 43.46 percent year-on-year. Net profit rose 20.99 percent to 61.36 million yuan.

First-half net cash flow soared 105 percent year-on-year. The group said the surge was partly driven by its rising business in dockless bike sharing services.

Youon debuted in the dockless bike sharing sector in November last year, putting out 50,000 bikes in cities including Shanghai, Beijing and Chengdu. According to its prospectus, this sector only took up 0.05 percent of its income in 2016. The bulk of its earnings then remained with docked bicycles.

Analysys analyst Zhang predicted the business model of public bikes with locking poles will eventually be replaced by dockless bikes, because the former lacked competitiveness in technology and user experience.

"Youon is now taking the lead, mainly in the lower-tier cities where industry leaders such as Ofo and Mobike have not yet entered," he said.