Only the stock price has hit a new low: Wall Street is more rational for Chinese electric dealers

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Core tip: After 8 months, only goods will finally break the Sino-US listing of the vacuum, but still did not break free from the fate of the bleeding listing.

4.35 dollars.

It was the closing price of the brand discount website on March 30, the fifth lowest since its IPO in 5 trading days.

Beijing time March 24, the only goods will be 6.5 U.S. dollars in the IPO price in the United States, a total of 11 million shares, an additional 15% of the allotment rights, the total financing of more than 70 million U.S. dollars.

The trading was a break on the first day of the deal, ending at $5.5, down 15.38% from its IPO price. On March 30, the closing price of USD 4.35 has fallen by 33.08% over its IPO price.

Last August, Tudou bled to the market. After a lapse of 8 months, the only product will finally break the Chinese stock to the U.S. listing of the vacuum, but still did not break free from the fate of the bleeding listing.

This is probably the result that nobody wants to see.

Bleed on the market "positive and negative"

July 2011, the only product will launch the IPO process. Although today is still "bleeding", but this result is not easy.

This February, the only product will be submitted to the U.S. SEC IPO application, the plan to raise the maximum amount of 120 million U.S. dollars.

On March 22, the annual summit of the Guoqing, Dangdang CEO of the public said that only the product will be a cold road, in Hong Kong without any investors to order.

The word "cold" is not an unwarranted guess. It can be corroborated that March 24, the only product will determine the issue price of 6.5 U.S. dollars, compared to the previous announcement of the 8.5-10.5 U.S. dollars in the lower limit of the pricing range also reduced by 23.5%. According to the 6.5 dollar issue, the goods will be valued at about $317 million trillion, compared with 400 million to more than $500 million, according to the original pricing range.

The Jinsha venture partner on the micro-blog sigh, "This knife cut hard enough."

When Guoqing had thought that the IPO price was too low and the underwriter Morgan Stanley openly scold the war, vividly shows the entrepreneur to the value of extreme care. From that, it is not hard to imagine that only the management of the products, including investors in the "cut meat" when the feelings of the heart.

Not only lowered the issue price, in accordance with the requirements of the underwriters, only the two major VC shareholders Sequoia Capital and DCM promised to buy on its IPO date of about 10 million U.S. depository shares (1 ads representing 2 common shares).

Even so, at the end of the day, there was still news that the only commodities IPO plan could be stranded.

In well-known foreign VC Vice President Publicity (alias), it seems, "now listed is not the best way, the best is to do a round of private placement."

In January 2011 and April, Sequoia and DCM jointly completed two rounds of private investment in the only commodities association, with a total investment of 61.4 million U.S. dollars, with Sequoia and DCM holding 19.3% and 19.2% respectively before the IPO.

A peer revealed that as early as May 2011, only products will have sought the C-round private placement, but not fruit. One of the key reasons is the price: "VC's valuation of the electricity quotient has been generally reduced, and only the goods will be the B-round of the valuation of about 400 million dollars", the peer said, no one is willing to take this price, and the reduction of financing for Sequoia, DCM is not cost-effective.

From the financial information, the difficulty of seeking a listing in the only thing will be, there is no choice.

In 2011, all of its cash and cash equivalents were $44.95 million trillion, with a cash flow of $32.24 million after offsetting a 12.71 million dollar bank loan. In 2011, the average monthly operating cost of the goods will be around 12.5 million U.S. dollars, that is, its existing net cash limit can only maintain 2.5 months of operation.

"Not listed it will have a lot of problems, very likely to die." "Some foreign investment bankers think.

But in the opinion of the investment banker, the only way to go on the market is to succeed, the stock sold, but from the whole result, "is a failure."

First, he argues that falling share prices have hurt Wall Street investors and that trading volumes are not high, and it is difficult to restart investor interest in the stock, which means that, at least in the short term, there is no refinancing function.

This concern was verified. It is reported that Joseph Schuster, founder of the Ipox Schuster Fund, which focuses on new equity investments, said that only the first-day break of the product would show a red flag to investors participating in the IPO, and that institutional investors might not be expected to participate in the IPO of Chinese companies, Otherwise, there will be losses.

Second, the investment bankers believe that the only product will be able to bite the bullet, the future in order to meet the commitment of investors, may have to make some irrational decisions, the company's development is unfavorable.

But things have a positive side.

Only the business model of the product will be in the form of special sale (flash purchase) to consumers retail brand apparel manufacturers inventory.

"In the case of everyone financing difficulties, only commodities will be listed into the capital, can quickly bigger, and may beat competitors, improve and upstream bargaining power, reduce marginal costs, improve profitability," said VC vice president of the publicity, "This is a winner-take-all market.

Therefore, publicity that the only product will be bleeding listing, is a rational decision.

Zhangxiaolong, the executive director of Societe Generale's innovation capital, said that for the sole investment organization, "the ability to go public even if the loss of money also harvested liquidity and open pricing benchmarks." ”

But not entirely. After the bleeding of the potato market, because of stock prices and volume downturn, VC did not get the opportunity to set the IPO.

At present only the stock price and turnover performance, it seems less than potatoes.

Publicity that the VC must wait until the company's performance benign development, volume amplification when it is possible to exit. Of course, if you follow the example of potatoes and Youku, it's a stopgap.

Case or trend?

Only the results show that 2009-2011 three years, the total net income of 2.8 million U.S. dollars, 32.6 million U.S. dollars and 227.1 million U.S. dollars, an annual increase of 10 times times and 5 times times. 2011, its gross margin reached 19.15, but so far has not realized profits.

After the IPO, only the total stock of goods will reach 48.7387 million ads, according to the 6.5 dollar/ads calculation, only the goods will be listed on the valuation of about 317 million U.S. dollars.

The use of such a method to interpret Wall Street's valuation of the only goods: in 2012, with expected sales of $500 million, margin maintenance of 20%, gross margin of 100 million U.S. dollars, and the value of 317 million U.S. dollars is about 100 million U.S. dollar gross margin of 3 times times.

P (market capitalisation/earnings per share, or P/e) is a typical method of capital valuation. However, for those who have not yet made a profit, VC often use P/S (market value/expected sales, i.e., marketing rate), P/gross viewable (market value/expected gross margin), etc., and then consider the business model, market size, team and many other factors to come to a comprehensive valuation.

Whether the use of p/e,p/s or P/gross viewable, Fortune Venture deputy director of the Ye Xianyo view, for the same company to be invested, the same VC final results are similar.

Zhang said that Wall Street's valuation of the company is the result of a combination of factors, but with p/gross viewable to measure, relatively, there is a certain representation. It could also be used to interpret the valuation multiples that Wall Street gave when it went public.

Take as an example. In December 2010, when the 16-dollar/ads price, the sale of 17 million ads, valued at about 1.27 billion U.S. dollars. 2011, Dangdang revenue growth of 59%, up to 3.619 billion yuan (about 570 million U.S. dollars), the gross profit margin from 2010 22.2% to 13.8%, about 500 million yuan (about 79 million U.S. dollars).

In this rough calculation, the P/gross viewable multiples obtained when the IPO is 16.

As the publicity said, from the longitudinal view, from the MAI, when the listing, to the present only products, Wall Street to China's valuation level is declining.

Only goods will be "bleeding listing": Case or Group Omen?

IDG Capital partner Yang that since the second half of last year, the entire capital market has been basically downward trend, and a few Chinese concept stocks in the financial, management and other problems, these are the Chinese companies to go to the U.S. IPO has adverse impact, especially in the absence of many attributes, such as financial indicators, growth indicators to prove their own time , it is inevitable that Wall Street has misgivings about the shares.

However, Yang stressed, also can not generalize, "although all are electric dealers, Wall Street for different companies, different models, different quality, different categories of companies will be treated differently."

When and only goods will be two different business models. When listed, it is a very easy to underwrite stock for underwriters, as it has "China's Amazon", but the originator of the vente privee and the gilt of the United States are not listed.

In the first generation of Tang Haof, a securities group in eastern and southern China, the US capital markets most valued the company's business-driven capabilities, which he believes should be higher than the value of the goods.

So, then, if there are electric companies to the United States to go public, is it possible to encounter only the bad luck of the goods will be listed bleeding?

Thor, managing director of Highland Capital, obtained from Wall Street that "only goods will be a case." Cheung said Credit Suisse was "still confident".

However, Chen Yu, head of investment holdings, said that Wall Street was more concerned about the profitability of internet companies than it was before.

Indeed, exclusively in the loss of three Chinese power companies in the United States performance, far inferior to Sina, Baidu.

This argument was rejected by the eternal. "Is the Youku making money now?" did the potatoes make money? Sina, how high is the valuation ah, why? It must be Weibo, is Weibo making money? Zero income! " Cheung said that each case is not the same, good companies, leading companies, a good team, or have the opportunity, if Jingdong, where the customer is listed, queuing to buy a lot of people, after all, "the capital market is the most talk of efficiency."

The key is to see if it can be listed at the expected price. #p # subtitle #e#

Every guest, Jingdong has been the news of the IPO. But so far unfinished.

"While the sixth round of financing was valued at $3 billion trillion, Wall Street now estimates only 2 billion." "One of his friends on Wall Street gave a lower valuation," said a VC close to the van, saying, "We can take a look at the value of 1 billion dollars."

Cheung said, "The best time to go on the market is certainly at the right moment and".

Obviously, Jing-dong, Fank has not yet ushered in "the time of the people and" point. March 24, where one of the customers, its fund partner Yan at the Shenzhen It summit, said, "We never asked everyone to go public as soon as possible." Last year I heard the news that every guest will be listed is still more surprised, for me, it does not matter if the guests do not go public for ten years. "Yan also disclosed that, except for the future investment, where the customer operating profit has been positive," where customers will soon be profitable.

In the view of Zhangxiaolong, an executive director of industrial Innovation Capital, the product will be bled out, "by the way it also pulls down the valuations and future financing of domestic rivals".

Gathers the net Vice President Yi Zongyuan also has the same feeling, gathers the net is one with only the product will pattern similar flash buys the platform. Yi Zongyuan told reporters that only the valuation of the goods will be listed and the performance after the listing, "so that our business model listing and financing are difficult." The effect is quite large. ”

"If the first one is unsuccessful, the rest of the situation may be miserable," he said. "Cheung said.

The forced electric dealer private placement

Investment only product will this single, for Sequoia and DCM two investment institutions, "Lengnuanzizhi".

In January 2011, DCM and Sequoia bought a total of 20212500 A-round preferred shares at a price of $1/common stock, with DCM at 11025000 shares and Sequoia at 9187500 shares.

April 2011, the only goods will complete the B round of financing, the total amount of 41.2 million U.S. dollars, the investor is still Sequoia and DCM. In the price of 5.05 USD/Preferred Stock, Sequoia buys 5002084 shares and DCM buys 3164583 shares.

At the time of listing, two VC institutions of a-round preferred stock by 1:1 conversion rate, converted into common stock, and according to their anti dilution terms with the only product, the Sequoia and DCM B-round shares were converted to common shares by 1:1.0625, or 1 B-round preferred shares equal to 1.0625 common shares.

After the IPO, the total holdings of Sequoia and DCM were unchanged at 14,502,346 common shares and 14,387,453 common shares respectively.

Because 1 ads equals 2 common Shares, Sequoia and DCM hold only 7,251,173 ads and 7,193,726.5 ads respectively.

According to the current 4.35/ads stock price, Sequoia and DCM in a, b two rounds of private equity purchases of shares in the book value of about 31.54 million U.S. dollars and 31.29 million U.S. dollars respectively. Sequoia and DCM invested about 34.45 million dollars and 27 million dollars respectively.

On the day of the IPO, both Sequoia and DCM subscribed to $10 million worth of shares at a price of $6.5/ads. By current stock prices, their investment has lost 30%.

The future of the only commodities will be the stock price trend, no one can say.

In fact, with the two-tier market valuation fell, the electricity dealers in the first-level market financing has been fluctuation.

According to public understanding, now almost all the unfinished electricity business refinancing, have encountered the investors to talk about the valuation, the price is comparable to the current only products.

Ye Xianyo said Fortune had contacted a company that needed to raise capital last year, although its performance had changed considerably from the previous round, but the valuations were similar to the previous round.

March 21 this year, in the Qing Branch group held the "Second China Internet Investment Conference and the Forum on Electronic Commerce Investment and financing", the founder of the Qing branch group Gavin said, "2009-2010, the Qing branch venture investment in nearly 10 e-commerce companies, but nearly half a year did not put a home." The overall valuation of E-commerce this year is low. ”

If the simple use of digital comparisons, Publicity said, the electric business boom, VC has been "10-20 times" valuation bets, and has now fallen to single-digit, even under 5 times times.

Yi Zongyuan, vice president of the network, feels worse. "Private placement is no longer a matter of valuation," he said. Now, he says, the capital markets have been watching the electricity business.

But there are some maverick people.

In the electricity business in the winter, only products will bleed when the mouth, excellent network announced the global media giant Advance group capital injections, funds have been all to the account. Not long ago February 6, excellent people have announced the completion of the tens of millions of U.S. dollars in the B round of financing, by the Huawei International led, set Rich Asia, the old shareholders of the speed of light, as well as IDG and investment.

Huawei International has few previous investment in electricity, a close to Huawei International VC people believe that the current frequent movement of one of the reasons is, "they think the price is cheap." And the stake in the network is also advance in China for the first time involved in E-commerce.