Xiaomi’s weak debut signals trouble for upcoming HK tech listings
HONG KONG: Xiaomi Corp made a weak debut in Hong Kong yesterday, with the Chinese smartphone maker’s shares sliding as much as 6% on valuation concerns, in an ominous sign for its technology sector peers lining up listings in the city.
A packed initial public offering (IPO) calendar in the coming months will include a US$4bil deal from online food delivery-to-ticketing services platform Meituan Dianping and an up to US$10bil IPO from China Tower, the world’s largest mobile tower operator. “Given the targeted high valuations of many new-economy IPO hopefuls and the number of IPOs going forward, it will be challenging for the market to digest all of them,” said Hong Hao, chief strategist at brokerage Bocom International.
Xiaomi shares closed at HK$16.80 (RM8.62), having touched a low of HK$16 in early trade, compared to the IPO price of HK$17 (RM8.72) per share. The main Hong Kong stock market index ended 1.3% higher.
Xiaomi priced the IPO at the bottom of the range it offered, in a deal worth US$4.72bil – the world’s biggest technology float in almost four years.
The listing came, however, as escalating trade tensions between the United States and China have shaken markets over the past several weeks. The spat pushed Hong Kong’s benchmark index to a ninemonth low last week.
51 Credit Card, a Chinese online credit management company, raised HK$1bil (RM513mil) from a Hong Kong IPO after pricing it at the bottom of an indicative price range, Thomson Reuters publication IFR reported yesterday.
Asked at the listing ceremony yesterday if the low pricing of Xiaomi and some other tech firms will weigh on upcoming IPOs, Hong Kong stock exchange CEO Charles Li said it was not up to the exchange to have a view: “The market is always open. It’s open to everybody... If you don’t like the price, you can stay away.”
Xiaomi’s IPO valued the firm, which also makes Internetconnected home appliances and gadgets, at US$54bil, almost half the US$100bil it had initially hoped for and below its more recent target of at least US$70bil.
At yesterday’s closing price the company had a market value of US$53.3bil.
Xiaomi’s IPO had been expected to raise up to US$10bil, split between a Hong Kong and a mainland offering, which was postponed last month in a surprise move.
The HK$17 price valued the company at 39.6 times its forecast 2018 earnings, while iPhone maker Apple is trading at 16 times and Chinese social media and gaming giant Tencent Holdings at 36.