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Xiaomi postponed CDR issuance, is the window guidance, or self-selection?

via:博客园     time:2018/6/20 9:38:05     readed:473


May you snap up for half your life, return or not. If it is said that the former "rice" is ridiculed by the millet phone, this time may apply to the millet CDR.

After the Dragon Boat Festival, as the country’s first single CDR issuer, Xiaomi suddenly announced the postponement of the CDR issuance application, leaving many investors who wanted to “buy” the Xiaomi CDR.

Millet halts 30 billion CDRs: Respect for choice

According to the announcement issued by the China Securities Regulatory Commission earlier, the Xiaomi Group's public issuance of CDRs is scheduled to be reviewed on June 19. It is generally believed that Xiaomi will successfully attend the meeting today.

However, on the morning of the 19th, the Xiaomi Group stated through official Weibo that after repeated and careful research, it decided to implement the listing plan in Hong Kong and China in a step-by-step manner, that is, after listing in Hong Kong, it would then choose to issue a CDR to the domestic market. To this end, the company initiated an application to the China Securities Regulatory Commission and postponed the issuance of the issuance audit committee meeting to review its CDR issuance application.

Prior to this, Xiaomi Group was expected to be the first company to issue CDRs on A shares. On June 7th, Xiaomi Group applied to the China Securities Regulatory Commission for the issuance of CDR. On June 14th, Xiaomi Group received feedback from the Securities Regulatory Commission. Only about 12 days before and after the CDR queuing time was issued.

In order to tie in with the CDR's issuance progress, Xiaomi postponed the time to market by 1-2 weeks, changed the original time-to-market for the end of June and early July, and planned to set prices for A-share CDRs and Hong Kong IPOs on July 9, 2018. The CDR was issued on the Shanghai Stock Exchange on July 16, 2018, and the IPO was issued on the Hong Kong Stock Exchange on July 17, 2018.

If so, how much will Xiaomi CDR's financing be? According to the CDR prospectus submitted by Xiaomi, the proportion of the basic shares of Xiaomi’s CDR’s issuance size to the total share capital after the issuance of CDR and Hong Kong stocks is not less than 7%, and the underlying shares corresponding to the CDR of this issuance account for CDR and Hong Kong stocks issuance. The total scale ratio is not less than 50%.

Based on the 7% and 50% ratios, a number of agencies currently analyze that Xiaomi’s CDR is expected to reach RMB 30 billion. In the history of A shares, this initial financing scale will enter the top 10, and is expected to surpass Guotai Junan, becoming the IPO with the largest A share fund raising since 2011.

Facing the change of Xiaomi, the China Securities Regulatory Commission issued an announcement soon, saying that it respected the choice of the Xiaomi Group and decided to cancel the review and approval committee meeting to review the company’s issuance of filing documents.

Why did millet give up drinking soup?

The reason behind Xiaomi's sudden halt of the CDR is that experts believe that the pressure is mainly on valuation. Dong Dengxin, director of the Wuhan Institute of Finance and Securities Research Institute, said that at present, the financing environment of A-shares is not good, and the valuation level has dropped significantly. Even if Xiaomi’s successful issuance of CDRs as planned, it is expected that after the listing, the probability will fall below the issue price, and vice versa. Affecting the company’s brand and operations, Xiaomi decided to take the first opportunity to issue CDRs on the H-share market first, in consideration of the interests of all parties. This is a wise and secure method.

Guo Shi Securities analyst Xiao Shijun also holds similar views. Xiao Shijun believes that there are certain advantages for Xiaomi to postpone the listing. Xiaomi will gradually appear a reasonable price range after listing in Hong Kong, and will be issued within the territory in the future, which is more conducive to the market and investors. In fact, Xiaomi had some degree of optimism about the issuance of CDR. However, after suspending the listing of CDRs, giving A-share investors and the market a certain amount of time and space to observe Xiaomi’s performance in Hong Kong can avoid the huge amount of both listings. Market turmoil.

It is reported that Xiao Jun founder Lei Jun had this valuation for the company that was born in April 2010: Xiaomi has 70 million users, and each user is worth 380 US dollars. In this way, the market value is 30 billion US dollars. According to this algorithm, as of the end of the quarter of this year, Xiaomi already has 190 million monthly active users in the network, and if the value of a single user rises to 530 US dollars, then Xiaomi's market value will exceed 100 billion US dollars. For Lei Jun, who holds a 32.1296% stake, it will undoubtedly be satisfied with this figure.

Dong Dengxin pointed out that based on the valuations previously given by the investment bank, although analysts from JP Morgan and Credit Suisse gave a maximum valuation of US$94 billion and US$92 billion, they range from US$71 billion to US$80 billion. The value is a large probability judgment of the market. However, at this moment, the current market liquidity has been unable to support the valuation of Millet $70 billion.

In fact, the issue of pricing and valuation of CDRs has attracted the attention of regulators. According to media reports, the recent regulatory agencies have convened the organization to hold two meetings on how to price innovative companies. The purpose is also to hope that through reasonable pricing, efforts should be made to guide rational investment by all parties in the market and maintain the smooth operation of the market. According to relevant persons of the China Securities Regulatory Commission, the A-share market is dominated by retail investors, and the market is fragile. Investors' risk identification and risk tolerance are relatively weak. When valuing the pilot companies, they are more cautious about pricing.

The above-mentioned sources believe that traditional valuation methods such as price-to-earnings ratios are not fully applicable to pilot companies. New mature valuation models have not yet been established or have not been effectively tested. Valuation and pricing are difficult, and it is necessary to find prices through full market inquiry. .

The China Securities Regulatory Commission requires that the inquiry agencies conduct independent, in-depth, and objective research before the quotation in the pricing of the issue, and maintain sufficient prudence. The quotation must stand the test of time and be scrutinized by all parties in the market, and effectively act as a constraint on the price of the issuer. The role of the issuer is to promote prudent pricing; after the CDR is listed, it has the responsibility to lead the market to rational investment and maintain the smooth operation of the market.

So, is it possible that Xiaomi’s suspension of the CDR may be the result of the guidance of the supervisory window? In this regard, Dong Dengxin believes that the possibility is not high. Because the innovation of CDR is of great significance to the regulatory authorities, it will not easily intervene in market behavior. Moreover, Xiaomi's suspension of the CDR does not mean that the overall issuance of the CDR may slow down significantly.

It is worth noting that some analysts recently believe that the CDR issue should be suspended. Goldman Sachs analyst Liu Jinjin said that it is expected that potential CDR issues, including Xiaomi, will add up to US$60 billion. Originally innovative companies may face valuation pressures because investors can choose to buy other large, more well-known and more profitable stocks.

U.S. Securities analyst Gao Ting also believes that CDR will pose liquidity pressure on A shares in the short term, saying that high-quality growth stocks are favored by investors after the launch of the CDR, and are brought to the stocks with high valuation but slow growth. Selling pressure.

What is CDR?

The full name of the CDR is the Chinese Depository Receipt, the Chinese name is "Chinese depositary receipts", in fact, is a way for overseas companies to go public in China. The CDR is also seen as the Chinese version of "ADR", the American Depository Receipt, which is also a way for overseas companies to be listed in the United States. The "list of shares" listed in the United States is basically ADR. Using CDR, domestic "rice flour" can achieve the transformation from a spiritual shareholder to a substantial shareholder.

After the CDR is the international board and strategic emerging board, Chinese officials hope to once again try to keep excellent Chinese companies in the country. This time, the determination and dedication are greater than before.

In March this year, the General Office of the State Council forwarded the notice of the China Securities Regulatory Commission on several opinions on launching pilot projects for the issuance of domestic shares or deposit receipts by innovative companies. It should be artificial intelligence, cloud computing, biotechnology, high-end manufacturing, strategic emerging industries, software and integration. Circuits open up IPO or CDR green channels and encourage these unicorn companies to list their A-shares as much as possible.

On the evening of June 6, the Securities and Futures Regulatory Commission issued nine files in a series. While releasing the CDR trial management measures, it also revised the “First Act” and the “Starting-up Strategy for the Growth Enterprise Market,” and released a series of pilot work packages at the same time. rule.

According to the requirements of the CSRC's documents, the CDR's application conditions include: high-tech industries and strategic emerging industries with a market capitalization of not less than RMB 200 billion, or operating income of not less than RMB 3 billion in the most recent year and a valuation of no less than RMB 20 billion. The company has established a continuous operation for more than 3 years, and the actual controller has not changed within the last 3 years.

In addition, the China Securities Regulatory Commission has relaxed the regulatory requirements for domestic companies listed in the pilots' ——as long as they are fully disclosed prior to listing, pilot companies can adopt the VIE structure and multi-level equity structure. The China Securities Regulatory Commission also removed the requirement for pilot companies to make initial public offerings for three consecutive years of profitability.

According to the prospectus disclosed by Xiaomi, Xiaomi’s income from 2015 to 2017 was 66.811 billion yuan and 684.34 respectively. Billion yuan and 114.625 billion yuan; operating profit for the same period was 1.373 billion yuan, 3.785 billion yuan and 12.215 billion yuan respectively.

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