Brief IPOs & Placements: Koolearn: Losses in Full View and more

In this briefing:

1. Koolearn: Losses in Full View
2. Koolearn: Marketing Expenses Have Taken Operating Profits Down the Drain

1. Koolearn: Losses in Full View

When we previously argued that the Koolearn IPO was ‘hurtling towards losses’, its latest PHIP update provided little reprieve to our postulation.  Further analysis on the latest update can be found below the fold. 

2. Koolearn: Marketing Expenses Have Taken Operating Profits Down the Drain

• Koolearn updated its IPS prospectus and posted operating losses for 1H2019 (ended Nov. 2018).
• The company spent significantly on online promotion, but we believe that online promotion is not useful.
• We also believe online marketing expenditures are not a productive use of the Company’s cash, as Koolearn’s brand was already well known among consumers due to its parent company, New Oriental.