Chinese intelligent vending machine maker Beijing Ubox Online Technology has filed for an initial public offering in Hong Kong.

It is the largest unmanned retail operator in China, with the largest vending machine network in the country, the Ant Group-backed firm said in the prospectus, citing data from Frost & Sullivan.

The IPO could raise as much as US$500 million (HK$3.9 billion), Bloomberg had reported last year.

Founded in 2011 Ubox counts Ant, Primavera Capital, CCB International, Guoxin Energy Fund and Haier Group among its investors.

Ubox operates facial-recognition payment machines, snack vending machines and beverage vending machines in shopping malls, schools, offices, hospitals and other places across the mainland.

Its smart retail devices leverage technologies including artificial intelligence and facial recognition, its website showed.

The vending machine retail industry in China is fragmented and has witnessed rapid growth in the past few years, according to the Frost & Sullivan report, which said the size of the market in terms of retail sales increased from 8.8 billion yuan (HK$10.3 billion) in 2016 to 27.1 billion yuan in 2021, representing a compound annual growth rate of 30.3 percent.

Ubox ranked first in total transaction gross merchandise value and network scale in the China unmanned retail industry for 2019, 2020 and 2021, according to the report.

Its main competitors are Dalian Fujibingshan Vending Machine, Easy Touch and TCN.

Ubox had more than 102,700 vending machines across 288 cities as of last year, 81 percent of which were located in tier-one, new tier-one and tier-two cities, and the largest point-of-sale network in China.

Its supply chain network includes 101 warehouses and 305 sorting centers covering 85,139 Ubox points of sale, and it cooperates with 13 well-known international fast-moving consumer brands.

In 2020, Ubox's revenue slumped by 30 percent to 1.18 billion yuan amid the Covid pandemic, when consumption activities were also affected but surged 40.7 percent to 2.68 billion yuan in 2021 as the pandemic stabilized, with gross profit rebounding 97 percent to 1.1 billion yuan, while net losses decreased 84 percent to 188.2 million yuan in 2021 from 1.18 billion yuan in 2020.

COVID RISKS

Ubox has highlighted the risks it faces, which include slower sales amid Covid restrictions, shortages of merchandise due to disruptions to the supply chain, deterioration of business relationships or potential changes of distribution methods by suppliers.

Excessive inventories built up amid the pandemic could also cause problems, as sales decrease and affect cash flows.

Termination of partnerships may lead to failure to maintain the existing business scale, which may lead to a fall in revenue that will affect its results.

It also warns that widespread penetration of convenience stores and other retail channels may reduce demand for purchases through vending machines.

Ubox's main aim of getting listed is to expand the coverage and penetration of its network and it plans to increase the number of vending machines in different consumption scenarios and categories, from beverages and food to personal care, cosmetics and other lifestyle machines across all cities in the mainland.

Ubox plans to open around 150,000 new points of sale over the next three years. It will use the IPO net proceeds to further develop its supply chain capabilities and enhance its warehouse inventory management capabilities by building or upgrading its warehouses and logistics systems.

Goldman Sachs, China Securities International, and Huatai International are the joint sponsors.

Vending giant makes smart moves