After The World'S Largest IPO Suspension: Ant Group'S Re Listing Schedule And Difficult Value Revaluation

A series of chain reactions caused by the suspension of listing of ant group are still concerned by the capital market.

Facing the suspension of the world's largest IPO, for ant group and investors, the most important thing now is two things: when can it be listed? Is ant worth 2.1 trillion after restart?

According to media reports, on the night of November 3, when ant group announced the suspension of A-share and H-share listing, Jing Xiandong, executive chairman of ant group, summoned senior executives above the concentration level to hold an emergency meeting. At the meeting, it was revealed that it would take at least half a year for ant's IPO to restart.

However, the industry is not optimistic about the expected re listing of ants within half a year. Many market participants believe that there is still great uncertainty in the resumption of ant's IPO, and the key factor determining the progress of its IPO is when the new small loan regulation will be implemented.

In addition, after the suspension of the IPO of ant group, revaluation has almost become the consensus of the industry. The extent to which the market value of ant group will eventually shrink and whether there will be a cliff diving has become a major focus of continuous attention in the industry.

The world's largest IPO stalled

From the IPO process, ant group has come to the last step before listing. On November 3, in the trading hall of Shanghai Stock Exchange, the listing materials of ant group had been arranged properly, and the major media began to work on ant listing.

Everything was ready, but the east wind did not blow as scheduled.

On the evening of November 3, on the eve of listing, the IPO of ant group, originally scheduled for November 5, was urgently suspended by the Shanghai Stock Exchange. In the meantime, whether the ant war fund violated the rules and regulations caused a storm of public opinion, or led to the final suspension of the "butterfly wings".

On the evening of August 25, Shanghai stock exchange accepted ant group's IPO application for science and technology innovation board. Meanwhile, ant group submitted its listing application to the Hong Kong stock exchange. It marks the official opening of the listing of this technology financial giant in Shanghai and Hong Kong.

According to SMIC's science and technology innovation board, only 29 days of IPO audit time was needed. At that time, some industry insiders expected that ant group would be listed before and after October 20 at the earliest.

On September 18, the IPO of ant group's science and technology innovation board was held and submitted for registration on September 22. At this time, the IPO progress of ant group was a week later than the initial market expectation. If the registration is smooth, ant group can still be listed before the new rules on small loans are released.

However, nearly one month after filing for registration, ant group's IPO on the science and technology innovation board has not made any new progress.

Close to regulators have disclosed to reporters, "the Securities Regulatory Commission in the registration process card ants." However, the person did not disclose the reason to reporters.

But in mid October, there were media reports that ant had been delayed because of the fund's violation of financial regulations. The focus of the dispute is: whether there is a conflict of interest between ant group, the main body of IPO, and ant fund sales company, which is the subsidiary of the exclusive sales agent of ant war fund, and whether ant group underwrites its own IPO.

At that time, some securities analysts pointed out to the reporter of 21st century economic report that the obvious problem of ant in the fund sales process was that the exclusive agency sales cooperation was not fair enough, and the risk warning was not enough.

In response, a spokesman for ant group said that the listing process of ants is progressing orderly in both places, and there is no preset timetable, and any speculation about the timetable is not based on facts.

No matter what kind of trouble we experienced here, the CSRC still agreed to the initial registration of ant group when it came to October 21. At this time, ant's IPO progress has been one month behind the original market expectations. As a result, ants have hit a change in the "regulatory environment for financial technology.".

In the history of A-share, there are not many cases in which the payment for issuance has been stopped and the subscription funds have been returned. Except for the 10 stocks during the "stock disaster", there are at least three similar cases in the A-share market: Ningbo Li Li Electronics Co., Ltd., which was suspected of financial fraud in 2008; Suzhou Hengjiu Optoelectronic Technology Co., Ltd., which was invalid due to patent query in 2010; and the company was granted the right to apply for new shares in the end of October 2010 Exposed suspected of false increase in revenue of rice wine enterprises shengjingshanhe.

The outcome of these cases is rather tortuous. After 2008, after a series of equity transfer, Ningbo Lili changed into Li'ang micro and landed on the science and technology innovation board on September 11, this year.

Suzhou Hengjiu held its IPO meeting on January 22, 2010. On March 18, it was required by the regulatory authorities to check the termination of patent rights reported by the media, and the listing of the company's shares was suspended. In June 2010, the gem issuance audit committee rejected Suzhou Everbright's IPO application. After six years, Suzhou Hengjiu chose to "seek another way out" and listed on the SME Board of Shenzhen Stock Exchange on August 12, 2016.

On December 17, 2010, shengjingshanhe was suspended from listing for half an hour. The SFC's final verification report found that there were problems in the disclosure of shengjingshanhe's customers and inventory in the prospectus, and that 580 million yuan of financing funds together with interest were returned. Since then, there has been no public information related to shengjingshanhe IPO.

However, it should be pointed out that most of the above cases were stopped due to financial fraud. The nature of the suspension of ant group is quite different from the above cases.

The key point of re listing: when will the new regulations on small loans be implemented?

According to the announcement of the Shanghai Stock Exchange on November 3, one of the reasons for ant group's suspension of IPO is the change of financial technology regulatory environment in which the company reports.

The previous day, on November 2, the people's Bank of China and the China Banking and Insurance Regulatory Commission issued the Interim Measures for the management of Internet small loan business (Draft for comments), which put forward higher index requirements for Internet small loan and joint loan business. At the same time, the new regulations also brought direct restrictions on the trans provincial operation and loan amount of ant group, resulting in a significant capital gap in the company's joint loans and other businesses.

"The change of financial technology regulatory environment" mentioned in the announcement of the suspension of listing of ant group refers to the new regulations on small loans, "said an investment bank close to the listing project of ant group. From the perspective of rules, after the CSRC makes the registration decision and before the listing and trading of stocks, the exchange also has the right to require ant group to make a request Suspension of listing.

After the suspension, it will face the problem of restart.

"Re listing postponed for about half a year", this is the conservative forecast given by Jing Xiandong after ant group announced the IPO suspension news, and Jing Xiandong convened an emergency meeting of internal middle and senior management.

But in the industry's view, such a conservative forecast is not "conservative". The decisive key factor lies in the uncertainty of the implementation time of the new small loan regulation.

"Half a year's re listing is the most ideal and fastest situation. At present, the new small loan regulations affecting its listing are still in the stage of soliciting opinions. If ants can carry out substantial listing operations, they also need to wait for the implementation of the new rules and communicate with the regulatory authorities. " There are senior investment banks in Beijing said.

An analyst in the field of financial science and technology clearly told reporters, "ants can only be listed after the new regulations on small loans are formally drafted."

The reporter of 21st century economic report has noticed that the deadline for the feedback of the draft of the new small loan regulation is December 2, 2020, while the time for the formal draft is still uncertain.

However, it is worth mentioning that even after the suspension of the IPO, ant group is still within the validity period of the approval of IPO registration, which is valid for 12 months. It's a little hasty to go public again in six months. Is one year enough?

"Ant project to this stage, is no longer from the business logic can be predicted.". An investment bank of a medium-sized securities firm in South China said that normally, special instructions should be added to demonstrate whether the new rules are in line with the new rules and the impact of the new rules on the company's business.

"We can't solve the problem by adding special instructions now," said Wang Jiyue, a senior investment banking personage. "We need to fully demonstrate whether the existing model conforms to the regulatory spirit. At present, it should not be. Then we need to adjust the mode, involving a series of legal documents adjustment, so that the new business model can meet the regulatory requirements. This also needs to be confirmed by the central bank, and it is not compliance if it says it is compliant. Finally, we have to measure the demand for capital and the impact on business growth of the new business model adjustment, and adjust the credit rating.

According to the above-mentioned senior investment bank personage, ant group still needs to wait for the implementation of the new small loan regulation after obtaining regulatory approval. If there is no substantial difference between the new regulation and the draft for comments, it can start the re listing process after the competent authorities confirm the operation compliance. Specifically, the municipal Party committee of the exchange shall first examine and approve, and then start the inquiry and issuance process.

"It's hard to predict, but on the whole, 12 months is not enough." The investment bank said.

Wang Jiyue said that from various regulatory statements, ants should still be listed on the science and technology innovation board. "In the final analysis, ant is a technology company, a benchmark, just to standardize.".

Difficult valuation restructuring

In the view of the industry, the draft of the new regulations on small loans has the greatest impact on ants: in a single joint loan, the contribution proportion of small loan companies operating network micro loan business shall not be less than 30%.

Among the 1.7 trillion yuan credit balance contributed by ant platform, the proportion of actual loans or asset securitization realized by the company's financial institution partners is about 98%, and the on balance sheet loan directly provided by the company's subsidiaries (mainly ant mall and ant micro enterprises) accounts for about 2%.

For ants whose 40% of their revenue comes from the micro loan technology platform, the impact cannot be underestimated.

Therefore, eliminating the consumer loan business or replenishing capital become the two possible paths for ants to restart listing.

"I think there are two ways: one is to remove the credit business and realize the listing; the other is to make the supplementary capital listed according to the valuation of banks.". However, the senior investment bank in Beijing said, "the two routes are not cost-effective for ants. After dismantling the credit business, ants will lose their core business, and the valuation will inevitably drop. If the capital is replenished, it will be "bloody listing", and the valuation will be greatly reduced compared with that of banks. ".

We might as well explore the possible changes of ants' valuation under the two paths.

Before that, ant group has always emphasized its scientific and technological attributes and downplayed its financial attributes; in market valuation and analogy, it is also compared with technology companies. The final issue price of ant group's a shares is 68.8 yuan per share. The earnings per share is calculated by dividing the net profit attributable to the parent company after deducting non tradable assets in 2019 by the total share capital after the issuance without considering the over allotment option. The corresponding P / E ratio is 153.69 times.

If credit business is excluded, payment business will become the core business. PayPal (pypl), which focuses on payments in the United States, is currently trading at 67 times earnings. With this benchmark, ant's valuation will drop by about 45% even if excluding the credit business.

According to the financial technology industry analyst mentioned above, "ant micro loan business will contribute 52% of its net profit in the mid-term of 2020. If we want to remove this part, it will basically be payment business, and the profit contribution of financial management and insurance is relatively small.

In the future, it still depends on the attitude of the regulatory authorities, whether the business rectification and capital increase in the later stage can meet the regulatory requirements, and the acquisition of various business qualifications still need to be seen. "

If we choose the second way, according to sun Haibo, President of the Institute of financial supervision, under the constraint of "the proportion of capital contribution should not be less than 30%", ant group needs at least 540 billion yuan of on balance sheet loans and 170 billion yuan of ABS if it wants to maintain the scale of 1.8 trillion yuan of joint loans.

According to the principle of maximum 5 times leverage of on balance sheet loans, the total principal of ant mall and ant small and micro businesses needs to be expanded to 140 billion yuan. At present, their capital funds are only 17.6 billion yuan and 18.2 billion yuan respectively, totaling 35.8 billion yuan. This means that ant group needs to supplement the capital of at least 100 billion.

Once the capital is replenished, the valuation logic will be adjusted accordingly.

Kevin Kwek, an analyst at Bernstein in Singapore, said: "when ant group goes public, investors may not see it as a technology company as it used to be, because it will no longer adhere to the asset light business model and its growth expectations may be lower. Given the regulatory challenges, there may be a discount to previous valuations. "

Chuancai Securities pointed out that at present, the overall valuation of A-share financial companies is far lower than that of technology companies. The P / E ratio and P / B ratio of the banking sector are 7.0 times and 0.68 times, respectively. The P / E ratio of some banks is even lower than 0.5 times, far less than the 153.69 times of static issuing P / E ratio of ant group.

Wind's latest data show that the relatively overvalued Pb of China Merchants Bank can reach 1.75 times. If the current issue price of ant group is calculated, the price to book ratio will be close to 9 times. Once the benchmark financial sector valuation method, ant group's valuation will be significantly reduced.

According to tan Jiaping, an analyst at Morningstar, if the price to book ratio before the IPO of ant financial services falls to the level of top global banks, its valuation may face a 25% - 50% decline. That means its valuation could be cut by about $140 billion (more than RMB900 billion). "Ant's stock price is now 4.4 times its book value, and twice that of the top global banks mentioned above."

Compared with the financial technology company lufax listed in the US stock market, it may be a more scientific method. The company landed in the US stock market on October 30, and the P / E ratio of the issue was close to 14 times, but it was far lower than that of ant group. However, in the medium and long term, ant group's technology company attributes will be more certain, and there is still a lot of room for imagination in comparison with the valuation level. (Editor: Wu Yanling)