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MySteel.com to IPO

Caing, 4/07/11

Shanghai-based steel industry e-commerce platform operator Ganglian E-Commerce Co., Ltd. (MySteel.com) has filed to IPO with the China Securities Regulatory Commission (CSRC).

MySteel.com began preparations to IPO in 2009, but according to one assistant general manager, the company has no timetable for completion of the IPO pending approval from the CSRC.

Established in 2000, Ganglian E-Commerce was originally intended to be a third-party e-commerce transaction platform, according to the assistant GM, but market and payment conditions were not yet mature. Instead, MySteel.com became an information portal providing pricing data on nearly 20 types of steel products in 50 cities nationwide.

The site currently has more than 500,000 registered users, and over 30,000 paying member companies, including over 1,000 domestic and overseas steelworks such as BaoSteel and Angang Steel, and over 10,000 trading companies, including Minmetals and China Railway Express Co., Ltd. (CRE). The site is monitored by both investors and government agencies for market information.

MySteel.com saw revenue reach RMB 10 mln in 2003, after which it continued to maintain profitability. Revenue exceeded RMB 100 mln in 2009, and reached RMB 180 mln in 2010.

80% of the company's revenues come from a combination of membership fees and advertising. Shanghai Ganglian's information services are offered in three tiers: Class A members (RMB 5,000 in annual dues), Class B members (RMB 3,000), and special members (RMB 1,500), with paying member retention rates exceeding 90%. Shanghai Ganglian also generates additional revenue from e-commerce, research reports, publications, and conferences. E-commerce services, available to merchants for a separate annual membership fee of RMB 1,500, provide sellers with the ability to post products for sale as well as search capabilities, while buyers can browse listings for free. Advertising fees vary from channel to channel, ranging as high as RMB 500,000 per slot. Shanghai Ganglian also receives approximately RMB 200,000 in annual research and consulting fees from each subscribing securities firm.

In 2007, Shanghai Xingye Investment Development Co., Ltd. took a 56% stake in Ganglian for RMB 36.9 mln, after which Shanghai Ganglian began corporate restructuring. Beginning in 2008, Ganglian implemented a share incentive plan. The company has RMB 66.4 mln in registered capital with 30 outstanding shares among a total of 140 shareholders. With the exception of Xingye, all shareholders are management and staff of the company.

In 2007, Ganglian founder You Zhenhua, having left the company, acquired Custeel.com in 2007 for RMB 14.99 mln through Beijing-based Rui Ganglian Technology Development Co., Ltd. Custeel.com was established in 2000 by the China Iron & Steel Association along with China's 16 largest steelworks. In 2009, You launched metal and minerals information portal Umetal.com, which also derives revenue from membership and advertising fees, and has more than 300,000 organizations.

Keywords: B2B business model corporate restructuring e-commerce Internet IPO investment revenue CSRC registered users MySteel

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