Xiaomi’s Hong Kong stock tour will become the weather vane for the mainland’s unicorn listing.
On June 29, Xiaomi finally confirmed the issue price of HK$17, which means its valuation is about 54 billion US dollars, lower than previous market expectations.
The 21st Century Business Herald reporter learned from overseas institutional investors that the Hong Kong stock market is not good, the valuation of Xiaomi in the early period is too high, the fundamentals and business model to wait and see, etc., become the main reason for the market reaction is less than expected.
In the second half of the year, the US Mission, Tongcheng Yilong, Yingke, Looking for Steel Net, Hujiang and many other Internet companies plan to go public in Hong Kong. Some insiders believe that the future unicorn stock price speculation and high valuation are unlikely, fundamentals Still the key to pricing.
High valuation is unsustainable
On June 29, the IPO of Xiaomi Hong Kong stocks was finally priced at HK$17, which is the lower limit of HK$17-22 in the price range of the prospectus.
Since Xiaomi’s sale of 2.18 billion shares, it means that it will raise about 37.06 billion Hong Kong dollars. From this calculation, Xiaomi’s valuation is about 54 billion US dollars, far from the market rumors of 80 billion US dollars-200 billion US dollars. .
In this regard, Nanhua Financial Group senior strategist Qi Zhiyong said on July 2, 'The recent Hong Kong stocks are not doing well. In order to attract investors, Xiaomi needs to lower the issue price to make the valuation more attractive. In addition, the profitability of Xiaomi before the listing and Marginal profit is not as good as it is, which also reduces the attractiveness of investors. '
If the price is calculated at HK$17, the price-earnings ratio of Xiaomi is 39.6 times. In contrast, the US company's AAPL has a P/E ratio of only 17 times.
'Because of the high valuation given by the previous millet, foreign institutional investors are skeptical. ' A Chinese bank investment director also said on July 2.
As of June 28, a total of more than 100,000 investors participated in the retail subscription of Xiaomi, reaching 10 times oversubscription, becoming the world's largest retail-scale IPO since 2011, but the institutional investors' subscription has not yet been clear. The situation, reading group (00772.HK) oversubscribed 620 times, Ping An good doctor (01833.HK) was 653 times; Xiaomi final subscription situation is difficult to surpass the above enterprises.
A small private equity fund partner in Hong Kong told the 21st Century Business Herald on July 2 that he did not participate in the new subscription of Xiaomi. 'We have a consensus with many small and medium-sized private equity funds in Hong Kong, and feel that it is not the time to enter.'
He said that there are mainly two aspects to consider. The first Hong Kong stock market fluctuated greatly, the popularity was insufficient, and the new one could not make much money. The second one was doubtful about the positioning of Xiaomi. 'We feel that we can't understand Xiaomi. Lei Jun is in multiple The investor presentation stated that it is an Internet company, but from the perspective of financial reports, mobile phone revenue accounts for a high proportion, and it feels that it is a mobile phone and hardware manufacturer. Without understanding, investment can not be taken in.
According to the prospectus, Xiaomi's contribution to smartphone revenue in the past three years has reached 80.4%, 71.3%, 70.3%.
Guojin Securities analyst Tang Chuan directly gave Xiaomi Group a 'Reduce' rating. He integrated PEG, DCF and SOTP valuation methods, and averaged the value of Xiaomi to HK$358.1 billion, equivalent to HK$16 per share. Below the issue price of HK$17. Looking ahead to the stock price performance after Xiaomi's IPO, Tang Chuan believes that after six months of listing, it will still face tremendous pressure from early VC and PE shareholders to reduce their holdings.
Internet enterprise valuation torture
The valuation of Xiaomi has not been listed yet has shrunk. In fact, the performance of new economic enterprises after listing in Hong Kong has not been satisfactory this year.
Zhong An Online (06060.HK), Yuewen Group, Yixin Group (02858.HK), Razer (01337.HK) and Ping An Doctor showed a large decline compared with the initial listing, except for the reading group. The other four companies have broken.
'The market environment in which these companies were listed at the time was good, investors were active in trading, and funds were over-concentrated to speculate on such stocks. Now China-US friction, the Fed’s interest rate hike, and the slowdown of funds entering the market, investors are more cautious than before. It is found that the profitability of such stocks is difficult to support high valuations, so there is a deep correction. 'A Shenzhen private equity fund Hong Kong stock analyst said on July 2.
Under the background of the valuation of Xiaomi and the stock price of the new economic enterprises, will the pricing logic of Internet companies listed in Hong Kong subsequently be affected?
At present, many US Internet companies such as Meituan, Yingke, Looking for Steel Net, and Hujiang also plan to land in Hong Kong stocks; among them, market analysis predicts that the US Mission's target valuation is 60 billion US dollars. In this regard, Qi Zhiyong said that the new economic enterprise In the early stage of the listing, the stock price may have speculation; but in the medium to long term, investors will return to the fundamentals to see profitability and potential; if the profitability is not good, it will be difficult to support the high valuation.
The aforementioned private equity fund Hong Kong stock analysts analyzed the importance of fundamentals from the 'difference between true and false unicorns'. 'On the Internet companies in Hong Kong stocks, only Tencent's valuation is relatively stable, and other Internet companies have fallen sharply. This shows that many Internet companies are only a halo with a new economy. They are over-hyped in the short term. Foreign institutional investors have their own valuation system to judge true and false unicorns, such as liquidity and profitability.
A large brokerage investment banker in South China also said on July 2 that from the current secondary market situation, the timing of listing is not as good as in previous years. The valuation of Internet unicorns in the Mainland will be affected by the Hong Kong stock market, and it may be considered to choose low pricing to benefit investors, or Considering the US stocks and other places with better valuations.