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BlueFocus Eyes Hong Kong IPO Amid Dual Listings Boom

China's leading provider of marketing services is joining a growing tide of Shanghai- and Shenzhen-traded companies making second listings in Hong Kong

Key Takeaways:

BlueFocus has filed for a Hong Kong IPO, boasting its status as China's largest and the world's 10th biggest provider of marketing services

The company gets 80% of its revenue from Chinese firms targeting foreign buyers, but that business is undermining its bottom line due to extremely low margins

Who says only manufacturers can make IPOs in Hong Kong to complement their current listings on China's domestic A-share markets in Shanghai and Shenzhen?

Such dual listings have become some of Hong Kong's biggest IPOs this year, led by names like electric vehicle battery (EV) giant CATL, which raised $35.3 billion ($4.5 billion) in May, and top condiment maker Haitian, which raised HK$10.1 billion in June. But now, leading marketing services provider BlueFocus Intelligent Communications Group Co. Ltd. (300058.SZ) is aiming to break that monopoly with its own planned Hong Kong IPO.

BlueFocus is one of China's oldest providers of marketing services, set up in 1996. It's also the world's 10th biggest provider of such services, making it the lone Chinese company among the global top 10, which includes such powerhouses as WPP (WPP.L) and Omnicom (OMC.US), according to its Hong Kong listing document filed last week.

The company's financials reveal some notable trends, including the huge amounts of money that Chinese companies are spending on campaigns targeting overseas customers. Such spending accounted for 80% of BlueFocus' revenue last year, and that part of the business is growing far faster than its business for marketing services aimed at domestic consumers.

The company is also notable for its razor-thin margins that are well below its global peers, which it attributes to its growing focus on the intensely competitive global marketplace. As a result of that operating model, BlueFocus has been drifting back and forth between the red and ...