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Hong Kong – Xiaomi Corp. made a weak debut in Hong Kong on Monday, with the Chinese smartphone maker's shares in the market.
A packed initial public offering (IPO) calendar in the coming months will include a $ 4bn deal from online food delivery-to-ticketing services platform Meituan Dianping and an up to $ 10bn IPO from China Tower, the world's largest mobile tower operator.
"Given the targeted high valuations of many new-economy IPOs hopefuls and the number of IPOs going forward," said Hong Hao, chief strategist at Bocom International Brokerage
Xiaomi shares closed at HK $ 16.80, having touched a low of HK $ 16 in early trade, compared with the IPO price of HK $ 17 per share. The main Hong Kong stock market index ended up 1.3% higher.
Xiaomi priced the IPO at a price of $ 4.72bn – the world's biggest technology float in almost four years.
The listing cam, however, as escalating trade tensions between the US and China have shaken markets over the past several weeks. The spat pushed Hong Kong's index to a nine-month low last week.
51 Credit Card, a Chinese online credit management company, raised HK $ 1bn ($ 127m) from a Hong Kong IPO indicative price range, Thomson Reuters publication IFR reported on Monday.
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."
Valuation
Xiaomi 's IPO valued the firm, which also makes internet-connected home appliances and gadgets, at $ 54bn, almost half the $ 100bn it was less than $ 70bn.
At Monday's closing price the company had a market value of $ 53.3 bn.
Xiaomi's IPO was $ 10bn, split between Hong Kong and mainland offering, which was postponed last month in a surprise move.
The HK $ 17 price is up to 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.
Mo Jia, a Shanghai-based analyst with industry consultancy Canalys, said the weak debut was to be expected
"The market environment is getting conservative. in Hong Kong dropped below IPO prices. Xiaomi's self-positioning as an internet company also needs some convincing, "he said.
While the company makes more than 90% of its revenue from selling smartphones and other devices
"We are an internet firm," Xiaomi's founder and chief executive Lei Jun told the listing at the Hong Kong stock exchange. [19659002] "From day one, we've set up a dual-class share structure. Without the innovation of Hong Kong's capital markets, we would not have a chance to go public in Hong Kong, "he said.
Xiaomi's float was the first under the city's new rules. Founders, as part of efforts to encourage more tech groups to choose Hong Kong over New York, its arch rival.
Xiaomi sold 2.18-billion shares in its IPO, 1.4-billion of which were new shares. CLSA, Morgan Goldman Sachs and Morgan Stanley.
The company is now the largest smartphone vendor in India and is pushing into European markets including Spain and Russia, though it has lost share in China recently to lower-cost rivals. Reuters
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