Korea/Asia, Events, IPOs, Douglas Research Advisory

Douglas Kim

Nearly 30 years of experience in the Korean/Asian equity research. Major sectors coverage include the following:
- Technology 
- Consumer 
- Special Situations/Deep Value Plays
- Tender Offers/M&As
- Holdcos/Stubs
- Asian Unicorns/Private Companies

Korea/Asia, Events, IPOs

Bitmain IPO Preview (Part 2) - King of Cryptocurrency Mining Rigs but Its Moat Is Shrinking

Canaan Inc. IPO Preview (Part 2) - A Closer Look at ASIC Developments and Competition

Canaan Inc. IPO Preview (Part 1) - The Biggest Blockchain Related IPO Globally in 2018

Bitmain IPO Preview: The Last Hurrah Before Reality Bites

Equity Capital Markets

<a href="https://www.smartkarma.com/entities/canaan-inc" target="_blank" data-smartkarma-citation="entities:27054:1" rel="noopener">Canaan Inc. (CAN US)</a> the second largest producer of bitcoin mining machines in the world, is getting ready to complete an IPO in the US in the next few weeks. Canaan designs chips for mainly cryptocurrencies mining machines. It is also trying to make chips for various AI applications. The company has put the IPO placeholder at $400 million.Canaan's IPO filings suggest that the company may be getting desperate for financial capital and at initial glance, most institutional investors will be highly skeptical of the company's ability to complete this IPO. Canaan's revenue declined 85% YoY to 288.8 million RMB in 1H19. Its gross profit declined by 97% to 11.2 million RMB in 1H19. In addition, the company generated a net loss of -330.9 million RMB in 1H19, from a net income of 216.8 million RMB in 1H18. <div class="content-highlight">In our view, it is probably in the best interests of Canaan as well as the potential IPO investors for the company to postpone the IPO once again when the company's financials are in a much better shape and meanwhile try to seek other private market capital. The IPO filing is on the border of being ridiculous. The potential institutional investors that put their precious capital into this IPO need to answer to their bosses and there are some serious flaws with this IPO, of which the most prominent concern is the collapse in ASPs of the bitcoin mining machines and the sharp decline in revenues. </div>

Canaan Inc. (CAN US) the second largest producer of bitcoin mining machines in the world, is getting ready to complete an IPO in the US in the next few weeks. Canaan designs chips for mainly cryptocurrencies mining machines. It is also trying to make chips for various AI applications. The company has put the IPO placeholder at $400 million.Canaan's IPO filings suggest that the company may be getting desperate for financial capital and at initial glance, most institutional investors will be highly skeptical of the company's ability to complete this IPO. Canaan's revenue declined 85% YoY to 288.8 million RMB in 1H19. Its gross profit declined by 97% to 11.2 million RMB in 1H19. In addition, the company generated a net loss of -330.9 million RMB in 1H19, from a net income of 216.8 million RMB in 1H18. In our view, it is probably in the best interests of Canaan as well as the potential IPO investors for the company to postpone the IPO once again when the company's financials are in a much better shape and meanwhile try to seek other private market capital. The IPO filing is on the border of being ridiculous. The potential institutional investors that put their precious capital into this IPO need to answer to their bosses and there are some serious flaws with this IPO, of which the most prominent concern is the collapse in ASPs of the bitcoin mining machines and the sharp decline in revenues. 

Canaan Inc.

Canaan IPO Preview