IPO Race In The U.S.: Growth Expectation Offsets Negative Impact, And Positive Exit Leads To A Rise In Valuation

The listing of Chinese companies in the United States will certainly be further diverted by the science and technology innovation board, the growth enterprise market and the Hong Kong stock market. However, some enterprises, due to their own profitability and industry direction, will still choose to be listed in the US stock market.

Fortunately, in the first half of this year, China and Switzerland are more cautious about the impact of new investment in the global coffee market. In this case, many unlisted new economy enterprises choose to IPO in the mainland and Hong Kong markets, and some Chinese capital stock companies have returned to Hong Kong for secondary listing.

However, there are still some counterfeiters who continue to go public in the United States. 21st century economic reporter noted that since the Ruixing incident in April, high-tech companies such as jinshanyun, Dada and soundnet have landed in the US stock market, as well as biotechnology companies such as legendary biology, burning stone and panshengzi. According to the 21st century economic report, the list of companies that have submitted IPO applications to the United States is still growing.

It is worth mentioning that compared with the bloody listing situation prevalent in 2018 and 2019, most of the above companies have ushered in stock price rise and investors' pursuit.

What are the reasons why these companies are optimistic about IPO? Under the background of A-share registration bonus, the return of Hong Kong stock market and the record high of American stock market, how should Chinese companies choose the listing place? What impact will this have on VC / PE investment exit?

Business growth expectations hedge against the negative impact of lucky event

"American investors are more selective about Chinese enterprises, and they will continue to invest only if they have stronger investment reasons than before. Investment institutions have done a lot more detailed than before on the qualification, materials and due diligence of enterprises. " In an interview with 21st century economic report, CFO Leo li of Firestone medicine talked about the impact of market changes on the IPO of burnstone.

In the storm break through the IPO, burning stone's stock price performance is particularly bright. On the first day of its listing on June 12, its share price soared nearly 50%. By the end of July 7, the stock price was at $26.99, up 60% from the offering price of $16.5, with a market value of $2.753 billion.

In addition to burning stone, there are golden mountain cloud, sound network and other companies have good performance. The shares of Jinshan cloud, which went public on May 8, rose from $17 to $35.99 at the close of July 7. The stock price of Agora, which went public on June 26, soared more than 150% on its first day of listing. By the end of July 7, the company's share price was 58.3 US dollars, up 191.5% from the offering price of $20, with a market value of $5.994 billion.

Why do these companies listed in the United States continue to be recognized by investors after the lucky event? Zhang Yi, CEO and chief analyst of AI media consulting, analyzed the 21st century economic report that although the Ruixing incident triggered a crisis of trust in the US capital market towards China capital stock companies at that time. However, from the macro level, since this year, most countries in the global market have suffered from economic recession due to the impact of the epidemic, and the epidemic situation in China has been controlled earlier. It can be expected that the growth rate of China's economy may not be as good as in previous years, but it is still developing steadily, which is relatively good in the global market.

"If investors recognize the development of China's economy, they will also have confidence in China capital stock companies whose main business is in the Chinese market, which offsets the negative impact of lucky." Zhang Yi said.

At the same time, Wang Jinlong, the global founder and CEO of global asset allocation platform Haitou, told the 21st century economic report that the release of water from the United States has increased liquidity and a large amount of capital has poured into the stock market. As a result, the U.S. stock market has been rising recently, and the NASDAQ index has reached a new high. In particular, leading stocks such as Microsoft and Amazon rose.

"On the one hand, these listed companies benefit from the east wind of the US stock market, on the other hand, they also have certain technical content." Wang Jinlong said. These companies, which belong to the core of Bioscience, are able to develop their own core technologies and services.

In addition, Wang Jinlong believes that the active and strong momentum of US stock trading is partly due to the lower threshold for US stock speculation. China has futu securities, tiger securities, and the United States has Robin Hood. These internet securities trading platforms have lowered the threshold for retail investors to speculate in US stocks.

All the three places listed were positive, and the valuation of the primary market rebounded

"We happen to have a invested company listed on NASDAQ tonight. This is a proof of our actions that we continue to support the listing of enterprises in the United States. After the Ruixing incident, the listing of enterprises is indeed faced with more stringent due diligence by intermediaries, which we think should be done as well. " On the afternoon of July 8, Wei Zhe, founder partner and chairman of Jiayu fund, told the 21st century economic report.

The company he mentioned is blue city brothers, the parent company of blue, which is mainly engaged in vertical community of LGBTQ crowd. At the same time, Moore International (the parent company of mcwell, a leading electronic cigarette equipment leader) and Anke innovation, an intelligent hardware manufacturer, invested by Jiayu fund will be listed in Hong Kong stock market and gem in the near future.

For the three companies to choose different listing places, Wei Zhe explained that everyone had their own considerations. For example, the social business of Blue City brothers is easy to understand by US stock investors. After its listing, smore international is expected to be the first e-cigarette stock. It is difficult to understand in the US stock market, but it has been subscribed by many investors in the Hong Kong stock market. As a consumer electronics enterprise, Anke innovation can best reflect its value in the gem.

In the face of the registered dividend in the A-share market, the secondary listing tide in Hong Kong stock market and the strong performance of the US stock market, Wei Zhe said that this is a good exit for VC / PE that is not seen in a few years. But at the same time, the positive effect of the exit from the secondary market has also affected the valuation of the projects in the primary market. This year, affected by the epidemic, many companies have more difficulties in financing, and the valuation fell seriously in March and April. However, due to the favorable exit from the secondary market, the project valuation has also risen rapidly.

Some Chinese companies are bound to come to the U.S. stock market

Regarding the listing trend of China capital stock in the second half of this year, Wei Zhe predicted that the listing of Chinese companies in the United States would be further diverted by the science and technology innovation board, the growth enterprise market and the Hong Kong stock market. However, some enterprises, due to their own profitability and industry direction, will still choose to be listed in the US stock market.

"Some Chinese companies are bound to come to the U.S. stock market." Another industry source told reporters. For example, it is very difficult for high-tech companies in the loss to be recognized by investors in China and can only be listed in the United States. After the implementation of the gem registration system, although non-profit enterprises are allowed to go public, there is still a long way to go, and the implementation will not be so fast. As far as the industry direction is concerned, it is also a good choice for enterprises to be listed in the United States if they are in the industries that are understood and recognized by American investors, such as cloud computing, SaaS and biotechnology.

However, in the case of not getting out of the epidemic situation, the continued rise of US stocks also causes some investors to worry about the market bubble. Will the technology stock bubble in 2000 reappear and will the listing of US stocks face systemic risks?

Compared with that in 2000, the situation is not entirely the same. In 2000, many technology companies lost money and their market value was relatively empty. But now Google, Microsoft and other high-tech leading companies are in a profitable State. Although their share prices are also very high, they are not so ridiculous. "So I think there may be a correction in technology stocks, but not so much volatility." He said.

Wei Zhe also said that whether there is a bubble or not depends on the financial data. In 2000, a large number of science and technology stocks lost money, and today's technology stocks are supported by profits. For profitable companies, there are no soap bubbles, but there may be beer bubbles. "When the soap bubbles are broken, they are gone. The beer bubbles are gone, and the beer is still there."

For the future performance of the U.S. stock market, Leo believes that this is determined by two relatively strong but opposite forces. The first is the epidemic situation and changes in international relations, which is a negative factor; the second is the liquidity relaxation of global central banks, which is a positive factor. The combined effect of the two factors is that the industry leaders are more popular in the capital market, and the loose liquidity forces the investment institutions to continue to invest in the volatile environment, so they choose the leading enterprises with less risk.

He told reporters that the superposition of these two forces will cause us to choose more carefully. But on the other hand, the funds become more abundant, and the result is that the strong get the valuation recognition and the participation of head investment institutions, and the gap between them is widening.

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