Boqii Holdings IPO: What Investors Should Know About This Chinese Pet Retailer

Goldman Sachs-backed pet retailer and online community company Boqii Holdings is set to debut during another busy IPO week.

The Offering: Boqii Holdings BQ plans on selling 7 million ADS at a price range of $10 to $12. The company will be valued at around $1 billion based on the mid-point of the pricing. Shares will trade on the NYSE as symbol "BQ."

Goldman Sachs GS invested in Boqii through its Series A in 2012 and Series B in 2014. Boqii Holdings completed a funding round three months ago, raising $60 million.

About Boqii Holdings: Launched in 2008, Boqii Holdings has a vision to connect people and pets. The company has done this by launching as an online retailer in 2008 and launching an online pet community.

The company rolled out a mobile app in 2014 to help its online community and also boost its online e-commerce platform. Live streaming and short video was launched n 2020 to help boost online community efforts.

Two private label brands were introduced by the company in 2015 and 2018. The company sells products with 17,853 SKUs through its private and partnered brands. Over 43.2 million online orders have been completed since its inception.

Boqii Holdings also took an equity stake in Shuangan, a pet food manufacturer, and manufacturing partner of the company, in 2017.

Boqii Holdings acquired a 23.6% equity stake in PetDog, a physical pet offerings retailer.

The company has 23 million registered users, including 3.5 million monthly active users.

Growing Pet Industry in China: New data suggests China is seeing higher pet ownership rates, thanks to growth from young pet owners.

In 2018, 100 million families in China owned a pet, representing 22% of the country, compared to 67% for the United States.

Chinese residents under 30 represented 45.2% of total ownership in 2019. Residents aged 30 to 40 represented another 29.5% of total ownership in the country. The growing young population in the country sets the pet industry up for impressive gains.

Alibaba Group’s BABA Tmall online platform saw cat food as the top category during its Singles Day shopping event on Nov. 11, which is the largest online shopping day online in the world.

During the pandemic, pets became a larger part of live streaming in China. The month of February saw pet-related livestreams up 375% over the prior year.

Financials: Boqii Holdings reported revenue of $109 million for the last full fiscal year. The company had revenue of $33.7 million for the recent quarter, which was a 26.2% year-over-year increase.

Boqii Holdings saw a net loss of $24.9 million and $6 million for the last full fiscal year and fiscal quarter respectively.

Future Plans: Boqii Holdings plans to continue its diversification efforts in the future. In the last fiscal year, the company saw 46.2% of sales in the pet staple food category and 10% in the snacks and wet food category. Other areas of supplies and health care made up 13.6% and 30.2% respectively.

The company made an acquisition in the veterinary sector and plans on boosting its presence in this field to diversify away from straight retail revenue.

Boqii Holdings’ equity stake in PetDog could also help with diversification away from online sales and also boost services revenue. PetDog is the largest pet sore franchise in China and also the largest training center for pet service professionals.

The company plans on growing its membership program, which was launched in 2018, and also wants to pursue additional acquisitions.