There is a wave of ipos in Hong Kong by Chinese Internet technology companies.
According to public information, outstanding Internet technology companies in many industries such as Xiaomi, Liepin, 51 Credit Card and Inke have submitted listing applications to the Hong Kong Stock Exchange. Xiaomi will also become the first CDR+ listed company in Hong Kong. In addition to the ipos, meituan-Dianping and Ant Financial are two other unicorns that have been hotly discussed in the industry.
Why do more and more Chinese Internet technology companies choose to list in Hong Kong? What are the characteristics of enterprises listed in Hong Kong at present? What other companies may IPO in Hong Kong in the future?
The reform of the Hong Kong Stock Exchange has opened a new window for Internet technology companies to go public
Chinese Internet technology companies are so enthusiastic about listing in Hong Kong because last December, the Hong Kong Stock Exchange finally decided to reform its listing mechanism. For the first time in more than two decades, it will allow companies with different rights to list under the same share, which officially took effect on April 30.
Previously, the Hong Kong Stock Exchange had been using the system of “all shares with the same rights, one share, one vote”, which made it miss out on Alibaba four years ago. At that time, Alibaba hoped to list on the Hong Kong Stock Exchange, but chose to go to the US due to the failure of AB shares and other issues, and eventually created the largest IPO in the HISTORY of the US.
Since then, the one-share-one-vote system has also become the biggest obstacle for emerging Mainland Internet technology companies to list in Hong Kong. As is known to all, most Internet companies all need to rely on the capital market in the process of growth of blessing to expand and deepen the service, in the process of continuous financing founder equity will inevitably be diluted, and mechanism of a vote is likely to make people in post-marketing gradual loss of control of the enterprise, the result is obviously not they want to see.
Therefore, iQiyi, B station, Sogou, Lexin, Hesheng, Ppdai and other booming Chinese “unicorn” technology enterprises finally choose to “bypass” Hong Kong to go public in the United States, and the Hong Kong stocks that constantly miss the “good horse” become increasingly ignored by Internet technology enterprises. According to hKEX data, new economy companies listed in Hong Kong in the past decade accounted for only 3 percent of the total value of the Hong Kong stock market, compared with 60 percent for NASDAQ, 47 percent for The New York Stock Exchange and 14 percent for the London Stock Exchange.
“In the past, Hong Kong has not embraced the new economy in the right posture. It has not been flexible and open enough in important areas such as allowing companies with special voting structures, non-revenue listings and secondary listings. New York already has a competitive advantage over us and a lot of other markets in that regard.” Charles Li, chief executive of Hong Kong Exchanges and Clearing Group, said on the day hKEx launched its “one share, different rights” policy.
Undoubtedly, the reform of the listing system of the Hong Kong Stock Exchange has opened a new window for the IPO of Internet technology enterprises in Hong Kong. In the author’s opinion, IPO in Hong Kong has three advantages for Internet technology enterprises. First, it can produce better brand influence effect for enterprises with most customer groups concentrated in China, and The Hong Kong stock market can meet the needs of enterprises to attract international investors’ attention and go global. Second, Hong Kong has a set of clear and standardized procedures, coupled with an independent, transparent and efficient regulatory body. Generally, companies can complete the listing process in about 6-12 months. Controllable listing time means that enterprises can better grasp the listing opportunity; Third, we are familiar with the A-share market, stock trading adopt T+1 trading way, the day to buy stocks that day can not sell, to the second trading day to sell. Hong Kong adopts T+0 trading mode, buy on the same day can sell on the same day, the benefit of this trading mode is to improve the market trading volume, for investors can also timely stop loss.
Driven by many positive factors, the Hong Kong Stock Exchange has naturally attracted many outstanding Internet technology companies. Although these enterprises belong to different industries, after comparing liepin, Xiaomi and 51 Credit card, it can be found that the enterprises IPO in Hong Kong after the new system reform of the Hong Kong Stock Exchange actually have some similar characteristics, which are mainly reflected in the following three aspects.
First, the reform or subversion of the traditional model
All successful up-and-comers appear as innovators or disruptors. On the whole, no matter Xiaomi, Liepin, 51 Credit Card, Inke, Kuaishou, etc., enterprises that have recently chosen to go public in Hong Kong are all up-and-comers in the industry and have reformed or overturned the existing models of their respective industries.
Millet: Despite recent millet because of 8 meters is too much like the twin brother of the Iphone X users and competitors been criticized lost the ability to innovate, but there is no denying that millet for the mobile phone industry has brought about many aspects of innovation, such as its overturns the traditional offline retail mode, open a new era of mobile Internet, “hunger marketing” caused the industry a great learning, As well as to reduce the price threshold of smart phones with cost-effective products, the mobile phone industry has changed the dilemma of expensive brand phones and copycat phones everywhere.
Xiaomi is firmly at Number 28 on CNBC Disruptor 50 2018, a list of the world’s Most Innovative Companies.
Liepin: Compared with Internet high-tech enterprises, liepin, as a recruitment service platform, seems to be difficult to connect with the word high-tech. But in fact, Liepin has been laying out AI and big data since 2014. Technology-driven services can be seen in many products such as interview speed and resume lens, which ultimately improve the matching efficiency.
Moreover, cooperated subversion of traditional recruitment industry also in headhunter introduced the mechanism of “bole”, breaking the traditional model of recruitment and talent recruitment platform only docking enterprise information asymmetry, and spread in the past in the online and offline headhunting gathered provides them with more convenient working platform and more effective tools and profit model, In order to better serve high-end talents.
51 Credit card: Among the many companies that have started directly from P2P to mutual finance, 51 Credit card, which started as a credit card bill management tool and then gradually expanded to Internet finance, is quite an outlier, but it is this innovation that has made 51 credit card in the financial industry smoother and more flexible. The credit card business is now one of the most focused businesses of tech finance companies such as Ant Financial and JD Finance.
The ability to subvert tradition is also the ability for an enterprise to stand out in the industry.
Second, profit model innovation
The subversion of tradition is an important reason why Xiaomi, Liepin and 51 Credit Card can come from behind, while the innovation of profit model is the reason why these three enterprises are difficult to be surpassed.
Xiaomi: Xiaomi started out as a mobile phone business and has since built its business around hardware, but there was some debate about whether it should be valued as a hardware company or an Internet company when it went public in Hong Kong. Hardware, the basic service, is actually the entrance to Xiaomi’s services, not the main source of profits. Xiaomi also describes itself in the prospectus as “an Internet company with mobile phones, smart hardware and IOT platforms at its core”, with Internet services as an important source of profits. According to the prospectus data, in the first quarter of 2018, Xiaomi’s Internet service revenue was 3.231 billion yuan, gross profit was 2.19 billion yuan, gross profit margin reached 65.58%, gross profit accounted for 40%, more than smart phones.
Liepin: Different from the traditional way that recruitment companies mainly rely on advertising to make profits, Liepin chooses to make profits through professional talent services. According to the prospectus, liepin’s profit sources include b-end talent package customization service, H-end headhunting value-added talent service, C-end talent membership service, resume consulting service, etc., with a clearer and diversified profit model. In addition, under the background of high supply and demand for middle and high-end talents, the profit model of Hunting recruitment is more conducive to rapid scale.
51 Credit Card: As the first and largest online credit card management platform in China, 51 Credit Card also does not rely on basic services to make profits. Its credit card bill management and repayment services are open to users for free. According to the prospectus, 51 Credit Card’s main revenue sources are four extended services: Credit matching and service fee, credit card technology service fee, credit introduction service fee and other income.
The fact that basic services are not the focus of profits not only shows that Internet technology companies such as Xiaomi, Liepin and 51 Credit Card take user experience as their development goal, but also reflects the innovative spirit of the three technology companies.
Unique profit model is one of the best means to differentiate from competitors to occupy the market. Whether it is Xiaomi, which has emerged as a new force, or Liupin, a multilateral platform that takes an unusual path, or 51 credit card, a small tool or a unicorn in the financial industry, it shows the benefits of diversified profit models in the new era.
3. Ecological empowerment
It is ecological empowerment that can best reflect the three technology enterprises of Xiaomi, Liepin and 51 Credit Card to drive innovation and promote industrial reform with science and technology. No matter xiaomi, Lipin or 51 Credit Card, they are constantly innovating and extending their services in their respective fields to meet more needs of users and help more partners break the shackles of tradition.
Millet: the millet iec 89 in June 2017, covering the phones, smart bracelet, intelligent speakers such as a large number of intelligent hardware, millet based on ecological building intelligent hardware “hardware + + new retail” Internet business model is not only difficult to overstep from his rivals, and make the millet after sales slide can miraculously rise again.
Hunting and hiring: The competition of middle and high-end talent market is ultimately the competition of service and matching ability. Since its establishment, Liepin has always focused on improving the recruitment of middle and high-end talent service. The closed-loop talent service ecosystem of “B (enterprise) + H (headhunter) + C (job seeker)” has become its broad moat. With the investment layout of Liepin in high-end headhunting company market and on-the-job education in recent years, Liepin has built an ecological closed loop throughout the life cycle of job hunting from vocational education to job hunting, employment and career planning. With the further improvement of this ecology after listing, the moat of liepin will be more stable.
51 card: from the credit card bill management extension, 51 credit card have covered the personal credit management, science and technology service and credit card online credit broker, investment services such as personal financial services, to build ecological break service boundaries, 51 credit card completed from tool to trading closed loop, this is what it has been two years in a row the foundations of the profit.
In the future, more and more outstanding Internet technology enterprises will choose To be listed in Hong Kong
Xiaomi, Liepin and 51 Credit Card are just an epitome of the ipos of Domestic Internet companies in Hong Kong. In the future, there are more outstanding companies likely to IPO in Hong Kong, such as Ant Financial and Meituan, two recently hotly discussed giants.
Ant Financial’s latest valuation reached $1,550 after it raised $14 billion in a new round of financing on June 8, making it the world’s most valuable unicorn with businesses covering payment, wealth management, credit and other financial sectors. After losing out to the Hong Kong Stock Exchange, Alibaba has been paving the way for ant Financial to go public, for example by acquiring a 33% stake through its subsidiaries. For example, Ant Financial adjusted its organizational structure in April, appointing Its CEO Jing Xiandong as chairman of the board… And all kinds of indications show that Ant Financial is highly likely to choose to go public in Hong Kong, or listed in Hong Kong and A-shares at the same time.
Compared with Ant Financial, Meituan is also very eager to go public. Before that, Meituan has been repeatedly reported that it will go public in Hong Kong. Wang Xing also said that “in the past few years, we have been preparing to go public”. On the one hand, Didi, which Meituan regards as its rival, is already preparing to go public this year. In order to compete with Didi for the support of the capital market, Meituan is highly likely to choose IPO. On the other hand, most of Meituan’s businesses continue to burn money, especially the newly entered online ride-hailing and mobike. Meituan needs abundant cash flow more than any other company, as existing businesses are not yet massively profitable and new businesses have to burn cash.
Ant Financial and Meituan, two Internet giants, have also demonstrated incisively and vividly the three characteristics of subversion or change of tradition, profit model innovation and ecological empowerment. This also gives us a revelation: in the rapid development of the Internet industry, those who are full of scientific and technological innovation spirit, dare to break the traditional shackles, and committed to ecological layout of the technology enterprises are often more able to grow up quickly, become the backbone of the industry, to bring innovation and change to the industry. Ant Financial, Meituan, Liepin, Xiaomi and 51 Credit Card are all examples. At the same time, the exemplary role of these outstanding technology enterprises will also inspire other Internet enterprises to choose to list in Hong Kong and further promote the innovation and development of China’s Internet industry and capital market.
Article/Liu Kuang public account, ID: Liukuang110