Shanghai-based and Hong Kong-listed Qiqi Technology, the parent company of Qijia.com – an internet home improvement e-commerce platform – debuted at the Hong Kong bourse yesterday following a 7-day delay. The Internet services firm had issued around 242 million shares at a final offer price of a mere HK$4.85 ($0.62), which was lower than its previous base offer range of HK$6.8 ($0.87).

Like Chinese smartphone maker Xiaomi’s IPO, the company’s shares dived as soon as the markets opened, falling by more than 5% to HK$4.60 ($0.59) at press time, with a market value of HK$5.567 billion ($709 million).

”We are pricing at a lower price because we believe that the lower the price is, the more the return space will be given to investors in the future”, said Deng Huajin, Qijia.com’s founder and general manager, stressing that the company couldn’t change the status of capital markets.

Established in 2005, the company completed its Series A financing round in December 2010 and counts Chinese internet search operator Baidu as a major shareholder; the firm maintains a 14.4% stake in the firm. As of 2017, Qijia.com maintains a 27.5% of market share in terms of gross merchandise value (GMV), according to a report by technology consulting Frost & Sullivan.

Despite this market position, its financials are not looking positive. Despite gross profit increasing from RMB 87.7 million in 2015 to RMB 240 million in 2017, the same prospectus also revealed that Qijia.com posted losses of RMB 163 million, RMB 154 million and RMB 109 million from 2015 to 2017, alongside negative cash flows.

This could raise concern among investors since cash flow is a closer determinant for startups, especially where losses in the early days are common. However, technology sector managers tend to adopt a short-term loss strategy, with costly initial investments necessary to build up market penetration and market share, with traditional business metrics arguably being an outdated gauge of corporate success – Nasdaq-listed Tesla Inc. being a case in point – as revenues eventually grow to the point the firm is profitable.

Moreover, the home decoration industry is also inherently slower when it comes to the journey to profitability – with longer processes required to test the operation, supply chain and delivery ability of each decoration company.

Editor: Shiwen Yap