How to invest CDR without blind investment in the pricing of millet


How to invest CDR without blind investment in the pricing of millet

Du Qingqing

[first financial exclusive learned, Lei Jun 11 fund company, began the roadshow. In order to get a higher initial valuation, Lei Jun explained to the agency that millet has developed from a mobile phone hardware manufacturer to an Internet technology company.

A good company, plus a good price, is a good deal. On the contrary, even if it is a great enterprise, if the price of investment is too high, it will make you lose money. So, pricing is very important.

The SFC's official website announced on the 11 day of "the prospectus for the open issuance of the depository certificate of the millet group" (hereinafter referred to as the "CDR prospectus"), which is different from the IPO prospectus of Hong Kong shares, and millet is expected to become the first standard for the strategic distribution fund to "hit new".

First financial exclusive learned that, as the founder and actual controller of the millet group, Lei Jun appeared in the fund company on the 11 day and began a roadshow. In order to get a higher initial valuation, the agency explained that millet has developed from a handset hardware manufacturer to an Internet technology enterprise, and has become a purpose of the Lei Jun's personal "mountain" road show.

How much is the CDR of millet in the end? How much profit can be gained through the strategic placement fund participating in CDR's "fight new"? At present, these two key problems are not yet conclusive. But on the other side, the exaggerated cases such as "Publicizing the vegetable market" and "the four - line urban retired old people are selling two - digit Fund - saving funds" are frequent, and the "blind investment" led by the agency sales is hot.

Millet "lower limit" and "upper limit"

As the new deal landing CDR opened the gate after the first application, millet synchronous Hongkong IPO and domestic issue CDR has attracted the attention of the market parties. However, when millet has not yet completed the pricing, the strategic placement fund has been on sale.

According to the regulation, the first batch of pilot enterprises must be listed in the listed red chip enterprises with a market value of no less than 200 billion, or a new enterprise that has not less than 3 billion of its operating income in the last year and is not less than 20 billion.

Millet said that the company's main revenue in 2017 is not less than 3 billion, and the report period of the F round second, third, fourth financing, financing valuation is not less than 20 billion, in line with the relevant provisions of innovative pilot enterprises.

The first financial reporter learned that Lei Jun has already started a roadshow with executives. Is millet a mobile phone hardware manufacturer or a high-tech Internet company? The classification of different industries means that the valuation of benchmarking is very different. This is also an important issue that Lei Jun is very concerned about.

In the prospectus, Xiaomi called itself "a Internet Co based on mobile phones, intelligent hardware and IOT platform". Last year, the company earned 114 billion 600 million yuan, of which the first business was 80 billion 600 million of smartphone revenue, 23 billion 400 million of IOT and 23 billion 400 million of consumer goods, and 9 billion 900 million of Internet services.

As the market approached, the company's valuation was rising, and millet was expanding as a result of a change in the fair value of redeemable redeemable preferred shares. By March 31, 2018, the company did not make up for a loss of 135 billion 200 million. However, after deducting non profits, the net profit of ordinary shareholders belonging to the parent company is -22.38 billion, and 2017, 2016 and 2015 are 233 million, 3 billion 945 million and 1 billion 38 million respectively.

Based on such a scale of profit, the valuation method of millet is doomed to be different from the common practice of A share listing in the past. However, in the millet prospectus, the "bet" arrangement between the company and the preferred shareholders determines the lower limit of the valuation of millet.

Up to now, millet group has completed A, B, C, D, E, F round preferred stock financing. There is agreement between millet and preferred shareholders. If the company fails to complete the listing before December 23, 2019, it needs redemption.

Since that day, the company has the right to ask the company to buy back in two ways except for other preferred shares of preferred shares east of the F round preferred shares, or most of the F round preferred stock holders, with the investment cost plus the annual profit of 8% plus the dividends paid but not paid, or to redeem the fair value of the market at the time point. The price is higher.

The articles of association also make clear provisions for "qualified listing", which are limited to the Hong Kong exchange, NYSE, NASDAQ, or other exchanges with A, B, C, D, E, F wheel preferred shareholders or the converted B general shareholders who have been held over 50% of the company, and require the company to reach a certain level at the time of the market.

After the first six rounds of financing, the company's shareholders increased to 71 seats. Among them, class a common shares accounted for 31.9706%, B class common shareholders accounted for 17.8666%, and the remaining six rounds of preferred shares accounted for 50.1628%.

Therefore, if the company fails to achieve a qualified listing within a limited time, the company is faced with the redemption of the preferred stock, which may cause greater risk to the company's business and finance.

From January 1, 2018 to the time point of the company, the overall rise of the company's valuation will result in a substantial increase in the fair value of the preferred stock, which will lead to a large amount of fair value change in the current period. In April 2018, millet issued 63 million 959 thousand and 600 shares of B common stock to smartmobileholdinglimited, which was controlled by the Lei Jun, and the equity incentive confirmed the 9 billion 830 million yuan share payment. Based on the above two factors, Xiaomi estimated that the net profit of the financial statements may still be negative.

Millet has not been published in the CDR prospectus, and the amount of "pre market valuation reached a certain level" in the agreement reached with preferred shareholders is specific. There are speculations in the industry or around 60 billion dollars. No matter how large the amount is, this also determines the lower limit of millet valuation.

"Millet may grow into an excellent company, but it is not worth a price of 80 billion or $90 billion at the present time, which is hard to say." A senior fund investor told the first financial reporter that the millet hardware and software were divided against the standard. According to the best state, the hardware against the standard apple, the software against the Tencent, the final market value is also difficult to reach the valuation level given by the current part of the agency.

In August 2010, millet A round financing, the additional price of $0.1 / share; September 2011, millet C round financing, $2.0942 / share; June 2012, D round financing, 8.1882 US dollars / shares; December 2014, F round financing, the additional price of 20.1682 US dollars / shares.

Can the price be taken as a reference?

"In principle, we should not be affected by the previous rounds of financing valuation. The financing of the past has nothing to do with the price I'm giving him now. If it has something to do with the past financing, it's very simple. I'll find a few investors. I'll double every half a year, double the valuation, and then go on the market again. Then you'll fix the price according to my last half year's financing? That's not good. " In the view of the above fund, investors need to use equity investment funds to assess the price of the market in the future, whether they invest in the first market or the two level market. The way to see the PE (P / E) only needs to be changed.

"Blind investment" and "blind selection" of the distribution fund

As the first order to issue CDR, Xiaomi has also become the main evaluation target for investors to participate in the strategic placement fund.

However, it is worth noting that, as the regulatory layer will strictly control the number and rhythm of the CDR release this year, which of the next companies will issue, is not yet sure. It is also uncertain whether these enterprises will issue at what price.

In other words, when investing in a strategic placement fund, investors can neither know the future direction of the fund nor know the future fund's participation in the price of CDR.

In the solicitation draft of "the underwriting and management of securities issue" issued in May this year, the CDR is issued in China, which can be sold to strategic investors. China Merchants Securities analyst Zheng Cheng Sha explained that the strategic distribution is similar to the "cornerstone" concept of "cornerstone investors" in the Hongkong market.

The 6 strategic placement fund was approved in June 6th and has been sold to individual investors since June 11th. According to the original design, the size of each strategic placement fund ceiling is 50 billion, a total of 300 billion.

According to the requirements of the SFC, the CDR issuer and its main underwriter will design the distribution scheme according to the respective situation of the enterprise and establish the incentive and restraint mechanism for the institutional investors to participate in the inquiry to promote the active participation and prudent quotation of the professional institutional investors.

However, with the full sale of funds, securities dealers, banks, and with the "national strategy", "policy bonus", plus "unprecedented", "limited time limit" and other attractive publicity, investors in "half faith" in the enthusiasm.

According to the general forecast of the institutions, there will be two types of future related targets. One is the red chip enterprises that have been listed abroad and meet the demand for 200 billion market capitalization, including Baidu, Tencent, Ali, NetEase, Jingdong; the other is an enterprise that has not yet been listed abroad and meets the value of the market value of 3 billion, including HUAWEI and drops. Dripping, Ali cloud, American group, today's headlines, rookie network, Dajiang innovation, word of mouth, hungry, wma motors, Wei Lai automobile, Beiqi new energy and so on.

The strategic placement fund is an innovation that allows retail investors to participate in sharing the growth and return of technological innovation enterprises. However, there are no similar cases in ADR and HDR. " Aforementioned fund people told reporters that the problem of investment should be identified by investment, and ultimately a price problem.

There are three kinds of analysis of how CDR can be priced. One is that regulators will conduct window guidance and guide enterprises to issue CDR with reference to 23 times price earnings ratio. The reason is that the A stock market has a new culture, after the first listing will continue to stir fry, if investors can participate in the two level market, if the price earnings ratio is not limited, the CDR premium will be significantly higher than the stock. The other is that CDR is essentially a depository receipt for underlying securities in different places, and only needs to be converted according to the positive stock price.

Another view is that CDR should be issued in the territory after a slight discount on the basis of positive stock prices. The reason is that BAT and other companies have been listed overseas for many years, and the market pricing has been tested over a long period of time, which is a relatively reasonable valuation level. It is more reasonable to make a little discount on this basis.

Zheng Ji Sha also believes that the internationally priced CDR price will be basically consistent with or slightly marginally priced from overseas prices.

However, in the eyes of the aforementioned fund managers, even if the discount is issued, it is difficult for domestic investors to assess the risk. "I think that once CDR is listed on A shares, it will definitely increase, and even have a higher premium than US stocks. But if you ask me if I can buy the placement fund, I can only say that I will consider it. " The former fund said, for different standards, the price of high and low, risk differences are very large, such as the Alibaba discount 10% distribution, perhaps willing to buy a lot of people, but if it is Baidu, that may be another problem. The key is how the placement fund will invest in various CDR, which investors can not confirm at present.

In his view, the U.S. stock market may be standing at the end of the 9 year old cattle, and the strategic distribution fund is closed for three years. Even if the current discount is issued, whether the stock price will fall after 3 years, no one is right now.

"Of course, funds and enterprises will play a game in the inquiry stage, and will take into account the possibility of future down, but the price remains.


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