(Yicai Global) July 12 -- Chinese fitness platform Keep, which reported double-digit growth in user numbers during the Covid-19 pandemic, ended its first trading day on the Hong Kong Stock Exchange merely 0.3 percent higher after completing HKD313.5 million (USD40 million) of financing amid extended losses.

Shares of Keep [HK: 3650] climbed to close at HKD29 (USD3.70), a bit above the initial public offering price of HKD28.92 after dropping 1.3 percent below the IPO price intraday.

The fitness platform, backed by Japanese investing legend Softbank Group, gained net proceeds of HKD192 million from the listing.

Investors need to be patient as the Beijing-based company prioritizes strategic development over breaking even, according to its prospectus. It will continue to step up inputs in brands, content, and products, and other areas to realize user growth even though expecting a sustained net loss and outflows of operating cash flows.

Keep has not notably improved its monetization weakness despite the surging demand for home-based exercise amid the Covid-19 pandemic in the past years, Shen Meng, managing director of Beijing-based boutique investment bank Chanson & Co., said to Yicai Global today.

Founded nine years ago, Keep has never been profitable. Last year, the firm posted a net loss of CNY667 million (USD92.8 million) under non-international financial reporting standards, narrowing by 19 percent from 2021. Revenue rose almost 37 percent to CNY2.2 billion (USD306.1 million), according to the prospectus.

The home exercise hype is calming down as in 2022, Keep had 36.4 million monthly active users, up 6 percent from 2021 when the annual growth rate was as high as 16 percent.

China is the world's largest fitness market as it had an estimated total of 374 million people who exercised regularly as of last year but the per capita annual spending on physical activities was CNY2,518.3 (USD350), much below the sum of CNY16,425 (USD2,285) recorded in the United States, suggesting large room for commercial development, according to a report by China Insights Consultancy.

Editors: Dou Shicong, Emmi Laine