Meitu HK IPO eyes $644 mil­lion

China Daily (Hong Kong) - - BUSINESS - By DUAN TING in Hong Kong tingduan@chi­nadai­

Meitu, the maker of pop­u­lar apps to edit self­ies, an­nounced on Fri­day de­tails of its pro­posed list­ing in Hong Kong. It is seek­ing to net about HK$ 5 bil­lion ($644 mil­lion) from an of­fer of 574 mil­lion shares at a price rang­ing be­tween HK$ 8.5 and HK$ 9.6 per share.

Al­though lower than the $710 mil­lion ex­pected ear­lier, the ini­tial pub­lic of­fer­ing is likely to the city’s largest in nine years.

Based on the prospec­tus, 90 per­cent of the to­tal global of­fer­ing will be of­fered un­der the in­ter­na­tional plac­ing to cor­ner­stone in­vestors Kingkey En­ter­prise and Ports In­terna- tional, and the re­main­ing 10 per­cent will be of­fered un­der the Hong Kong pub­lic of­fer­ing, which will open from Dec 5 to 8. Shares will be traded in board lots of 500 shares each with an en­trance fee of HK$ 4,848.37.

Cliff Zhao Wenli, chief strate­gist and deputy head of equity re­search depart­ment of China Mer­chants Se­cu­ri­ties (HK) Co Ltd, said the suc­cess­ful list­ing of Meitu will bring change and liq­uid­ity to the ex­ist­ing struc­ture of the Hong Kong equity mar­ket, which cur­rently is dom­i­nated by tran­si­tional sec­tors. Numer­ous uni­corns in the Chi­nese main­land could seek op­por­tu­ni­ties to list in Hong Kong, af­ter­wards. mil­lion

The prob­lem at this stage, ac­cord­ing to Zhao, is that most of the uni­corns are still at a phase of ex­pand­ing users. So, dif­fer­ent val­u­a­tion meth­ods lead to a di­ver­gence of in­vestors’ views to­ward this type of com­pany. And, the fu­ture de­vel­op­ment of star­tups usu­ally de­pends on the qual­ity of the com­pany’s founders.

Kenny Wen, wealth man­age­ment strate­gist at Sun Hung Kai Fi­nan­cial, pointed out that in­vestors may fancy Meitu stock due to fa­mil­iar­ity and an ap­petite for the in­ter­net sec­tor, but should be aware of pos­si­ble fluc­tu­a­tions in the stock price at the be­gin­ning be­cause the cur­rent busi­ness model is un­clear.

Meitu is sav­ing on costs and most of the com­pany’s deficits are pri­mar­ily due to an ac­cu­mu­lated fair value loss of the pre­ferred shares of 5.1 bil­lion yuan ($739 mil­lion) as of June 30, 2016, ex­clud­ing the im­pact of which and share-based pay­ments of 75.4 mil­lion yuan, its ac­cu­mu­lated loss would have been 1.1 bil­lion yuan.

The com­pany ex­pects to turn from deficits to prof­its at the end of 2017, ac­cord­ing to Gary Ngan King Le­ung, chief fi­nan­cial of­fi­cer at Meitu.

the num­ber of shares Meitu’s IPO in Hong Kong is go­ing to of­fer


Meitu CFO Gary Ngan (left), founder and Chair­man Cai Wen­sheng (mid­dle), and founder and CEO Wu Xin­hong pose for a photo dur­ing Meitu IPO news con­fer­ence in Hong Kong.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.