US Stock IPO Outlook | Revenue Down, Net Profit Up "Industry Old Four" How can Amber Finance reach a new level?

On March 6, Amber Financial Services Group Limited's holding company Rich Sparkle Holdings Limited (hereinafter referred to as "Amber Financial") publicly submitted an IPO to the U.S. Securities and Exchange Commission (SEC), intending to use ANPA as the stock code, with a fundraising range between $5 million and $7.5 million, applying for a NASDAQ listing. The company first submitted a confidential application to the SEC on September 13, 2024.

It is reported that Rich Sparkle is a BVI business company with no significant direct business, primarily conducting business activities through its sole operating subsidiary Amber Financial in Hong Kong. Amber Financial was established in 2016 and focuses on designing and printing high-quality financial materials, providing a wide range of financial printing services such as typesetting, proofreading, translation, design, and printing.

More specifically, Amber Financial mainly provides comprehensive services for all stages of document preparation for Hong Kong-listed companies and those preparing to list on the Hong Kong Stock Exchange. Its product portfolio includes listing documents, financial reports, fund documents, notices, and announcements. It also offers clients a wide range of convenient and high-quality financial printing services, including typesetting, corrections, translation, appearance design, and printing.

As a financial printing service company closely related to the secondary market, can Amber Financial impress NASDAQ with its genuine strength in its U.S. venture?

Revenue Down, Net Profit Up

The financial printing service industry is an indispensable part of the global stock market. Amber Financial's business relies on the Hong Kong stock market, including initial public offerings, secondary offerings, mergers and acquisitions, public and private debt issuance, leveraged buyouts, spin-offs, bankruptcy, and claims processing. This also means that the company's operating performance is susceptible to fluctuations in the global financial market.

This is clearly reflected in Amber Financial's latest operating performance.

According to the data disclosed in the prospectus, as of September 30, 2023, and September 30, 2024, the company achieved revenues of $6.2688 million and $5.8844 million, respectively, a year-on-year decline of 6.1%. The revenue decline was mainly due to a decrease in the company's core business of financial printing services, which saw a reduction of approximately $867,600 during the period.

At the same time, Amber Financial's gross profit also showed a downward trend during the period. As of September 30, 2023, and September 30, 2024, the company's total gross profit was $2.5615 million and $2.8076 million, respectively, a year-on-year decline of approximately 8.8%, primarily due to increased subcontracting fees resulting from the expansion of consulting services.

However, contrary to the performance of the two core financial metrics mentioned above, the company's net profit showed an upward trend during the same period. As of September 30, 2023, and September 30, 2024, Amber Financial recorded net profits of $809,100 and $846,200, respectively, a year-on-year increase of 4.6%.

Although the profit effect has improved, from the company's asset-liability structure, it does not mean that Amber Financial can be "complacent." According to the prospectus data, as of the fiscal year ending September 30, 2024, Amber Finance's total current assets amounted to $4.0441 million, while the company's current liabilities reached $3.0635 million, barely covering the total current liabilities with its current assets. Additionally, during this period, the company's cash and cash equivalents were only $320,200, indicating that the company's short-term liquidity pressure should not be underestimated.

Rising Demand for Digital Services: "Breaking the Deadlock" is Urgent

Looking back at the global stock market capitalization trends over the past few years, it can generally be summarized as "volatile fluctuations."

The global stock market capitalization rose from $76.3 trillion on December 31, 2018, to $123.3 trillion as of December 31, 2021. In 2022, due to the tightening of the global economy, global market capitalization temporarily declined. In 2023, as the impact of the pandemic waned, the global stock market began to recover, with the market capitalization reaching $119.0 trillion by December 31, 2023.

During this period, the number of publicly listed companies globally also saw a slow decline, decreasing from 62,959 at the end of 2018 to 61,881 by the end of 2023, with a compound annual growth rate of -0.3%.

However, it is noteworthy that the market atmosphere in the Asia-Pacific region is relatively positive and active, with the highest number of listed companies, totaling 37,746 by the end of 2023. Hong Kong and mainland China lead the Asia-Pacific region in the number of publicly listed companies, with mainland China's rapid industrialization and urbanization creating a favorable environment for companies seeking capital through public listings.

In terms of the competitive landscape, the financial printing services market is still quite competitive, with fewer than 50 market participants, including some internationally renowned companies that can provide comprehensive printing services and possess certain resource and technological advantages, as well as some local companies that benefit from deep local market knowledge, flexible pricing strategies, and quick response capabilities. Currently, in terms of the number of services provided to listed companies, Amber Finance ranks fourth in the Hong Kong financial printing services market, with a customer retention rate of 72.0% from 2022 to 2023, significantly exceeding the industry average.

It can be seen that although competition in the industry is fierce, Amber Finance still occupies a place in the market due to its own strengths.

However, from a deeper perspective, the current market challenges faced by the company may not only be due to intense market competition. Amber Finance's related businesses may face the impact of digital transformation, primarily reflected in three aspects, as follows:

First, the demand for traditional printing is shrinking, as global financial regulators gradually accept electronic documents (such as electronic prospectuses and online annual reports), leading to a slowdown in traditional printing business growth. Second, the demand for digital services is rising, with clients increasingly seeking digital solutions such as interactive PDFs, data visualization, and online roadshow materials. Third, the rise of hybrid models, where certain scenarios still rely on high-end printed materials (such as IPO ceremonies and shareholder meetings), creates a dual-track demand of "paper + digital." Therefore, in the company's latest growth strategy, Amber Financial stated that it will integrate generative artificial intelligence functions into its service modules. The company pointed out that although it currently relies on traditional information technology to generate deliverables, it recognizes the transformative potential of generative artificial intelligence. In the future, the company will utilize generative artificial intelligence technologies, such as advanced natural language processing (NLP) and machine learning algorithms, to improve operational efficiency and enhance accuracy. Additionally, the company plans to expand its global influence, such as by extending its business to the United States to leverage the growth of the U.S. stock market.

In summary, although Amber Financial operates in a "niche market" with relatively low competitive pressure under the head effect, it is important to note that building a core competitive advantage may still be key, as this could drive the company's overall performance to a new level. Whether the company can reverse its revenue growth through a strategy of technological iteration and expanding global influence remains to be seen over time