On the afternoon of June 29th, according to IFR, Xiaomi IPO is priced at HK$17, which is located at the low end of the HK$17-22.
As the first new economic company with the same rights and different rights to land in the Hong Kong market, Xiaomi's IPO sales were cold.
"Because the performance of several new economic stocks in the listed stock market is not satisfactory, the customer's subscription enthusiasm is not high, we have placed some orders at the price limit of 18 Hong Kong dollars. It is understood that many institutions are subscribed in a price-limited manner, Xiaomi eventually Pricing may not be in the upper limit." A Hong Kong stock newStock baseKim told the 21st Century Business Herald.
Xiaomi’s initial public offering in Hong Kong plans to sell 2.18 billion shares, of which 65% are new shares and 35% are old shares. The offer price per share will be 17-22 Hong Kong dollars, raising funds of 37.06 billion to 47.96 billion Hong Kong dollars. 37.06 billion - 47.96 billion Hong Kong dollars. Xiaomi is scheduled to be listed on the Hong Kong Stock Exchange on July 9.
Since the end of October, many high-tech concept stocks have landed in Hong Kong stocks, and new IPO subscriptions in the Hong Kong market are very hot. Due to the extremely low success rate of hot new stocks, in order to increase the chance of hitting “new”, retail investors generally use the brokerage to conduct financing transactions, which is commonly known as margin subscription. Typically, retail investors can use a 10% principal to finance 90% of the brokerage and pay interest and other expenses.
According to industry insiders, in the Hong Kong stock market, the subscription of new shares will generally be divided into two groups, namely, Group A and Group B. The retail investors who usually subscribe for one or two hands are classified as Group A, while the number of applications for Group B subscriptions are calculated at 100,000 shares, mostly for some. Institutional investors, or retail investors, subscribe for margins.
However, the splendid situation of the retail investors in the past has not happened. The market reaction of Xiaomi has been cold for two consecutive days after the official launch of the IPO. According to Hong Kong media reports, on June 25, 11 Hong Kong local brokers recorded a total of HK$7,472 million in marginal subscriptions, which was calculated based on Hong Kong's public offering of HK$2,398 million. The oversubscription was only 2.12 times. On June 26, 10 local brokerages recorded a total of HK$5.944 billion in marginal subscriptions, oversubscribed by 1.48 times, far behind market expectations.
In contrast, since the fourth quarter of last year, at least five new economic stocks have been listed in Hong Kong IPOs. Among them, Reading Group recorded a margin of subscription of HK$135.2 billion on the first day of the offer, and the Hong Kong Public Offering oversubscribed 624.95 times. The rate of public offerings is only 7.72%. Yi Xin, Zhong An Online and Lei Sn’s first-day exhibitions all exceeded 100 times.
“The performance of Xiaomi’s IPO is obviously worse than market expectations. As many new economic companies line up to go public in Hong Kong, the theme of this sector is no longer scarce, and the pressure on valuation will be more and more, it is likely to be in the pricing range. Lower price pricing. And Xiaomi's profit model has not been proven, valuation has exceeded the top international high-tech companies, including Apple, Tesla, etc.." Hong Kong Chief Strategist Hong Wei in an interview with the 21st Century Business Herald Frankly.
Poor performance in the secondary market
A number of "unicorn" companies listed in Hong Kong recently, the stock price after the listing is not good enough.
Zhang Zhiwei, co-director of Xincheng Securities, admitted that the stock prices of three representative new economic stocks, such as Wenwen Group, Yixin and Zhongan Online, have continued to fall sharply this year, leaving investors with a lingering fear.
The above-mentioned fund manager also pointed out: "After the Ping An doctor's listing, he suffered from Waterloo, which also caused many investors to worry about the performance of Xiaomi after listing. And the valuation of Xiaomi is high, and the overall sentiment of investors is cautious."
Taking Ping An Good Doctor as an example, the listing stable price period officially ended on May 26, and the next day's closing straight down 3.2%. Compared with the highest point of the listing on the day of 58.7 Hong Kong dollars, the stock price fell 20%, compared with the offer price of 54.8 Hong Kong dollars, it evaporated 14%. As of the close of June 27, Ping An’s share price fell to HK$49.65 per share.
As the first Internet insurance company in China, Zhongan Online was listed in Hong Kong on September 28 at an issue price of HK$59.7 per share. The stock price has soared in the initial period of the listing. It has soared to a high of HK$97.8, and the market value has even reached 140 billion. Hong Kong dollar. However, the good times did not last long. As of the close of June 27, Zhongan Online fell to HK$49.5/share, and the market value has shrunk significantly to HK$23.56 billion.
On November 8 last year, Tencent's reading group was listed on the Hong Kong Stock Exchange. The stock price once stood at HK$100 and its market value was close to HK$100 billion. On June 27, the intraday price was HK$71.9/share, the market value fell to HK$64 billion, and the evaporation was nearly HK$40 billion.
Profit model to be tested
Market participants pointed out that these new economic stocks are inevitably "broken" due to the lack of substantial profits to support the false high valuation.
Taking Xiaomi as an example, Lei Jun pointed out at the June 25th IPO press conference: “In the past eight years, many rounds of private placement financing, investors have given us a high valuation, and the valuation of the round three and a half years ago 45 billion US dollars." He stressed that Xiaomi's profit model relies on cost-effective hardware, gathers a large number of users, and realizes the realization in the mode of Internet service. However, according to the company's prospectus, smartphone sales are still the main source of Xiaomi's revenue. In the past three years, the total revenue contributed by smartphones has reached 80.4%, 71.3%, and 70.3%, respectively.
Ping An Good Doctor has sustained losses since its establishment. From 2015 to 2017, the net losses were 324 million yuan, 758 million yuan and 1.02 billion yuan respectively.
As the world's first e-sports listed company, Razer is one of the focuses of the market when it can turn a profit. According to the prospectus, as of the first half of last year, the company's operating loss reached $55.96 million, and the loss for the previous two years was $12.08 million and $63.13 million, respectively.
“Because the market conditions of Hong Kong stocks have continued to deteriorate recently, investors’ enthusiasm for new stock subscriptions has cooled down. The Hong Kong stock market has limited stock funds, which has also had a certain negative impact on Xiaomi’s IPO.” Guo Jiayao, chief strategist of China Yinsheng Wealth Management A 21st Century Business Herald reporter said.
As of June 27, the Hang Seng Index closed at 28,356 points, down 525 points or 1.8%, and fell 982 points or 3.3% for three consecutive trading days, hitting a new low since December 7 last year.
Hong Kong Interbank Offered Rate due to the Fed’s accelerated rate hikeinterest rate(HIBOR) has continued to climb, and the cost of capital for investing in Hong Kong stocks has continued to increase. According to data from the Hong Kong Treasury Market Association, on June 27, the overnight, one-month, and three-month HIBORs rose to 1.25214%, 2.01919%, and 2.08964%, respectively. The three-month interest rate has risen for 14 consecutive trading days, setting a new high since 2008.
At the same time, the South Bank funds of the "Hong Kong Stock Connect" also slowed down significantly. According to the data of this reporter, in the past 15 trading days, Hong Kong stocks recorded a net outflow in 5 trading days, with a cumulative amount of 5.915 billion yuan. (Source: 21st Century Business Herald)
(Original title: Xiaomi IPO is priced at HK$17. It is located at the low end of the HK$17 to HK$22 range)