Chinese auto-trading IPO may prove to be a lemon

District Copper

06/11/2017 02:49

(The author is a Reuters Breakingviews columnist. The opinions 
expressed are his own.) 
    By Alec Macfarlane 
    HONG KONG, Nov 6 (Reuters Breakingviews) - Yixin is 
preparing a Hong Kong IPO. Connecting auto buyers, sellers and 
lenders is good business as China's car market booms and 
millennials embrace debt. But a mooted value of up to $6.5 bln 
sounds over-revved. Even if the float goes well, the stock could 
later go into reverse. 
          
    Full view will be published shortly. 
    On Twitter https://twitter.com/AlecMac11 
    
     
    CONTEXT NEWS 
    - Yixin Group, an online auto-trading and financing company 
backed by Chinese internet giant Tencent, is planning to raise 
up to $867 million through an initial public offering in Hong 
Kong, Thomson Reuters publication IFR reported on Nov. 2. 
    - The Shanghai-based company, a unit of U.S.-listed Bitauto, 
will sell shares at an indicative price range of HK$6.60 to 
HK$7.70 each, IFR said. That implies a 30.9 to 36.1 times 
multiple of forecast earnings for 2018 and a 16.7 to 19.5 times 
multiple of expected earnings for 2019, IFR added.  
    - Yixin's market capitalisation will be $5.5 billion to $6.5 
billion before the exercising of a greenshoe, or shares set 
aside in case investor demand is strong. Unlike many Hong Kong 
IPOs, none of the shares will be sold to "cornerstone" 
investors, the report added. These investors support many local 
listings by committing to invest a fixed amount of money and to 
hold the stock for six months. 
    - The company will start book-building on Nov. 6, and price 
the shares three days later, IFR reported. The shares will list 
on Nov. 16. 
    - For previous columns by the author, Reuters customers can 
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    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
Yixin sets terms for US$867m Hong Kong IPO     urn:newsml:reuters.com:*:nL4N1N81PX 
Yixin Group premarkets Hong Kong IPO #     urn:newsml:reuters.com:*:nL4N1N51H7 
Bitauto statement    https://www.prnewswire.com/news-releases/bitauto-announces-the-ipo-hearing-for-yixins-application-to-list-on-the-stock-exchange-of-hong-kong-limited-300545316.html 
Yixin filing     http://www.hkexnews.hk/app/SEHK/2017/2017102901/Documents/SEHK201710290023.pdf 
Qudian IPO feeds debt-hungry Chinese millennials     urn:newsml:reuters.com:*:nL4N1MT18X 
Hit IPO undercuts the case for new Hong Kong board    
 urn:newsml:reuters.com:*:nL4N1M91FW 
Fiat Chrysler would rev up China's Great Wall     urn:newsml:reuters.com:*:nL4N1L72TL 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Editing by Quentin Webb and Katrina Hamlin) 
 ((alec.macfarlane@thomsonreuters.com; Reuters Messaging: 
alec.macfarlane.thomsonreuters.com@reuters.net)) 
 
Keywords: YIXIN IPO/BREAKINGVIEWS