Xiaomi's breakthrough rings the alarm for new economy enterprises to go public i

The highest price on the first trading day is HKD 17, which means that all investors participating in the subscription and placement have been sold out in one go.

Xiaomi's broken hair has already shown signs. According to Xiaomi's announcement, this issuance of 2.18 billion shares, of which 95% is for international allocation and 5% is for public subscription by investors. The public offering and international allocation received 9.5x and 1.1x subscriptions, respectively. Similarly, as a new economy enterprise, Yuewen Group, Zhongan Online, and Yixin Group oversubscribed more than 620 times, 400 times, and 559 times respectively during their public offerings last year. Both the public offering and international placement of Xiaomi have significantly lower subscription multiples, reflecting the cautious and rational attitude of investors. In addition, in the dark market trading conducted after the close of last Friday, its opening price fell below the issuance price, indicating that investors are not optimistic about Xiaomi's trend.

Xiaomi's breakout at the beginning of trading is closely related to the performance of new economy enterprises in the Hong Kong stock market. Since last year, five companies known as the "Five Swordsmen of the New Economy", including Yuewen Group and Ping An Good Doctor, have successively listed on the Hong Kong Stock Exchange. However, except for Yuewen Group, the stock prices of the other four companies have all experienced breakdowns, with Yixin Group having a maximum breakout rate of over 60%.

On the other hand, the downturn in the Hong Kong stock market will also affect Xiaomi's market situation. Since June, the Hang Seng Index in Hong Kong has continued to decline, with the largest decline exceeding 10%. The poor performance of the Hong Kong stock market will have a negative impact on Xiaomi's listing.

In addition, the high P/E ratio of Xiaomi's issuance is also an important factor that cannot be ignored. From 2015 to 2017, in terms of revenue, smart hardware such as smartphones accounted for a relatively high proportion, indicating that Xiaomi is currently just a hardware company like Apple in the United States. Based on the issuance price of HKD 17, Xiaomi's P/E ratio is as high as 39.6 times, while Apple's P/E ratio is only 17 times. Therefore, the burst of Xiaomi's stock price may have already been predetermined.

Although Lei Jun previously claimed that Xiaomi is "a global rare all-around enterprise that can do both hardware, e-commerce and Internet", even if Xiaomi is a new economy enterprise, the market will clearly tell investors that no matter how gorgeous its coat is, and no matter what concept or theme it has, the stock price performance is the most direct and true in the relatively mature Hong Kong stock market.

In fact, besides Xiaomi, mainland Chinese companies that are planning to go public in Hong Kong in the near future also include Meituan, Yingke, and Baobao Tree. Among them, there are both enterprises with the same shares but different rights, as well as new economy enterprises. This time Xiaomi's failure has also sounded the alarm for these enterprises invisibly.

The issuance price of HKD 17 and the breakout of Xiaomi indicate that industry insiders have inflated their valuation of billions. Many new economy enterprises in mainland China often have a corresponding valuation when financing, but the valuation when introducing funds is obviously different from the valuation when listing on the exchange. Therefore, it is not reliable for new economy enterprises to go public in Hong Kong based on their previous financing valuations.

For new economy enterprises going public in Hong Kong, the issuance price should not be set too high for the sake of so-called valuation. The market will provide an answer to the valuation of new economy enterprises. And once the issuance price is set too high, not only will it face the risk of breaking the law