Wookpecker International Takes Flight With New Hong Kong IPO Bid

Key Takeaways:

• Woodpecker International has reapplied to list in Hong Kong, reporting its profit fell 6.4% in the first half of the year to nearly 39 million yuan
• The home maintenance platform boasts an all-star crop of early investors, including well-known entrepreneurs Lei Jun and Yao Jinbo

Lau Chi Hang

“Maybe we can’t fix feelings, but we can just about everything else.” That motto from Woodpecker International Inc. could coax a smile from even those who have never used its services and would certainly leave an impression.

Now, the home maintenance and repair platform is hoping its name – and financial performance – will leave a different kind of positive impression on investors as it take flight a second time with a plan to list in Hong Kong. The company made its original IPO application at the beginning of the year but didn’t get far. With its latest application filed just before China’s National Day holiday, it’s hoping this new attempt can ride a recent rally that has boosted a handful of recent IPOs and is sending stocks to levels not seen for several years.

Many families have experienced the hassles of not being able to personally handle their home repairs, while also chaffing over subpar third-party service providers. Spotting that gap in the market, Woodpecker flew in by aiming to carve out a new space with its online maintenance and repair platform.

Its business model is rather straightforward: providing one-stop maintenance and repair services to homes with a wide range of needs. The platform connects technicians selling their services with consumers whose homes need repairs, using online tools to help users find a contractor most likely to meet their requirements. The company’s revenue comes from commissions and other fees paid by contractors who use the platform.

Market Leader

Woodpecker is China’s largest home maintenance and repair platform with 2.4% of the market in 2023 in terms of gross transaction value (GTV), according to data from consultancy CIC cited in the company’s listing document.

The company was founded by Wang Guowei, who worked as a repairman in his early years at a small maintenance company. He struck out on his own in 2004 by starting a refrigeration equipment maintenance and repair company with his sister in the Southwestern Chinese city of Chongqing. In a twist of fate, 10 years later he met Zhu Hongkun, publisher of the Chongqing Daily, at a client reception held by the newspaper. The pair clicked instantly with their vision of the big potential for China’s vast home maintenance and repair market and its digitization. They co-founded Chongqing Woodpecker that same year in 2014, positioning it as a platform providing home maintenance and repair services.

The company quickly attracted attention from investors, including business tycoon Lei Jun, co-founder of smartphone giant Xiaomi, who invested through Tianjin Jinmi and Suzhou Shunwei. Other early investor included Yao Jinbo, head of 58.com, often called the Craigslist of China, as well as Shanghai-based GoldenHome Living (603180.SH), which joined during the company’s Series C fundraising.

Accelerating Growth

Woodpecker has used the funds from those and other investors to expand rapidly, and now has presences in more than 300 cities doing repairs for more than 300 type of home appliances and other devices. The number of repair technicians using its platform nearly tripled from 7,092 in 2021 to 19,105 last year, and rose further still to 26,968 by the end of June.

The value of transactions over the platform has also grown rapidly, lifting the company’s revenue from 990 million yuan ($140.1 million) in 2021 to 2.48 billion yuan last year, representing annual growth of 58.5%. The number of repair orders completed over the platform also more than doubled from 4.3 million to 9.9 million over the period. The company logged 6.6 million repair orders in the first half of this year, with transaction value hitting 1.57 billion yuan.

Despite the steady growth, the company’s profits have been less stable. It logged a profit of 33.4 million yuan in 2021, but the figure fell to 6.2 million yuan the next year, only to rebound to 48.9 million in 2023. It attributed the changes to non-operational factors stemming from charges related to changes in the fair value of its financial liabilities. Its profit in the first half of this year totaled 38.9 million yuan, down 6.4% year-on-year, mainly due to a significant increase in sales and marketing expenses.

China’s home maintenance and repair market is flourishing, fueled by a new generation of homeowners. According to CIC, the market’s total transaction value reached 715 billion yuan in 2023 and it is expected to grow to 932 billion yuan by 2027, averaging 6.8% annual growth. Woodpecker is expected to benefit as more people look for such services online, with the share of such services provided over online platforms projected to rise from 14.5% in 2023 to 25.4% in 2027.

First Home Maintenance And Repair Stock

One of the company’s biggest challenges is ensuring the quality of service offered by workers on its platform. As a middleman, Woodpecker may lack the expertise to manage the qualifications and service levels of those technicians very closely. But poor management could cause user experience to suffer and tarnish the platform’s reputation and popularity.

More than 6,000 complaints were lodged against Woodpecker on the consumer complaint platform Black Cat by the end of September, covering issues like arbitrary charging and refusing to provide refunds for customers unsatisfied with their repair services. The company has also been subject to accusations that some repairmen on its platform engage in under-the-table transactions and provide subpar service.

The market where Woodpecker operates is currently quite fragmented and competitive, including other rivals like Wanshifu and Laobandaojia, with no single platform dominating. That means Woodpecker still has a shot at becoming the first Hong Kong-listed home maintenance and repair stock. Access to such an international financial platform could serve the company well over the long run, improving its market recognition and furnishing funds to emerge as a potential industry consolidator. But for that to happen, it will also need to give users of its platform greater confidence in the services they are buying.

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.