3 years ago
January 19, 2017
HeterMedia Completes IPO on the Hong Kong Stock Exchange
Financial printing and document services provider HeterMedia has listed on the Hong Kong Stock Exchange’s Growth Enterprise Market (GEM). The shares started trading on January 11, 2017 under the ticker code 8416. The net proceeds from the listing were HKD 35.7m (USD 4.6m) and market capitalization at the time of listing, HKD 240m (USD 30.9m). The share price has surged since the listing, which is not uncommon on the GEM.
HeterMedia was founded by current Chairman Eddie Yu and Vice Chairman Walter Tse more than two decades ago.
Hong Kong is among the world’s leading financial centers Regulations require investment banks, asset managers, and companies listed on the exchange to publish documentation targeted at retail investors in English and Chinese. (The Hong Kong variant uses traditional Chinese characters).
The over 2,000 companies on the exchange make for a vibrant market to design, lay out, and translate thousands of bilingual annual reports, circulars, fund factsheets, listing prospectuses, and other investment and financial marketing collateral.
In this market, HeterMedia competes with such global firms as Donnelley Financial and Toppan, and local players like Wonderful Sky or iOne. An IPSOS report puts the size of the Hong Kong financial printing services market at HKD 1.65bn in 2016. According to the same report, there are 21 financial printing service providers in the city, with the top 10 accounting for 77.2% of the market.
According to its own listing, HeterMedia generated revenues of HKD 125m (USD 16m) in 2014 and HKD 160m (USD 20.6m) in 2015. In the first half of 2016, the company’s sales came in at HKD 82m (USD 10.6m).
Profits before tax were HKD 19m (USD 2.4m) in 2015, and HKD 12.8m (USD 1.65m) in the first half of 2016. HeterMedia employs 125 staff, five of whom are full-time translators. In 2014 HeterMedia sold its printing plant in 2014, adopting a more service-focused and asset-light model.
HeterMedia outsources a significant amount of translation work to contractors. Total spend on outsourced translation increased from HKD 3.3m (USD 0.43m) in 2014, to HKD 4.2m (USD 0.54m) in 2015, to HKD 5.9m (USD 0.76m) in the first half of 2016, which represents 16% of the total spend on subcontractors.
Slator reached out to HeterMedia CEO William Chan to learn more about the listing. Asked to estimate the size of HeterMedia’s translation business, Chan told Slator “the majority of translation services are rolled up into a lump sum amount. We offer an integrated solution to our clients due to the project nature. Thus, it is hard to provide figures for the consolidated revenue only for translation.”
In addition to the translation of bilingual listing prospectuses (documents that quickly run up to 800 or 900 pages) and annual reports of listed companies (300 to 400 pages), a key driver of translation volumes are the fact sheets of mutual funds required to be in both Chinese and English as they target retail investors. A European equivalent would be the KIID (Key Investor Information Document) that requires translation into any of the languages of the countries a fund is marketed in; which generates significant revenues for many European language service providers.
According to CEO Chan, “clients would request both Chinese and English for their fund factsheets and other related reports or marketing collaterals. In addition to translation, we also assist clients with the editing and copywriting of the comments section. Our fund investment and insurance business alone contributed around HKD 47m (USD 6m) in 2014 and HKD 58m (USD 7.48m) in 2015.”
Surprisingly, perhaps, for a market where repetitive content abounds (think about all those financial tables or disclosure statements repeated across many regulatory documents), Hong Kong’s financial printers have been slow to embrace translation productivity tools. Until recently, the translation process was done manually using Excel term sheets, shared drives, and translators based across the border in (then) cheaper Mainland China.
This is changing as salaries in Mainland China have gone up dramatically over the past five years and translation management (TMS) and productivity systems have become more accessible. After some trial and error with TMS systems a few years ago, Chan said they partnered with a Europe-based TMS provider for the translation of HeterMedia’s very own listing prospectus.
The experience was an eye-opener. “We were able to cut down the turnaround time from four to eight weeks to days,” Chan said. He added that there are a few things still to be “patched up and enhanced due to the complicated workflow during the IPO drafting process.”
Chan said he plans to further reduce the company’s reliance on traditional financial printing with services such as translation becoming more important.