Maoyan Entertainment makes weak HK debut

Hong Kong

TENCENT-BACKED Maoyan Entertainment, China's biggest movie ticketing platform by sales, fell 2.7 per cent in its Hong Kong stock debut on Monday, the latest in a string of weak starts among Chinese tech firms listing in the financial hub.

Shares in Maoyan Entertainment opened near-flat at HK$14.82 (S$2.56), barely one per cent higher than the initial public offering (IPO) price of HK$14.80, which was already at the bottom end of an indicative range.

They then fell as low as HK$14, a warning sign for other Chinese tech companies that may be eyeing IPOs after achieving lofty valuations in private funding rounds. The stock was around HK$14.38 at 10.30am Hong Kong time.

Maoyan raised US$250 million in a smaller-than-expected IPO, and could raise up to US$287 million if a greenshoe, or over-allotment option, is exercised within the first month of trade.

Its float is being watched as a test of investor sentiment for Hong Kong deals after a patchy performance by newly listed stocks in 2018 amid US-China trade tension.

Maoyan's IPO already implied a "down round" for Chinese tech giant Tencent Holdings Ltd, as it valued the ticketing platform at US$2.16 billion - more than a quarter below the valuation reached in its last funding round in 2017.

Investors are bracing for further down rounds in China's much-hyped tech sector, as weak stock markets worldwide and the country's economic slowdown weigh on once-buoyant private markets.

Many firms such as online food delivery-to-ticketing services provider Meituan Dianping and smartphone maker Xiaomi Corp, which raised billions of dollars in their listings, are trading below their IPO prices in Hong Kong.

Maoyan had initially been looking to raise US$500 million to US$1 billion in its IPO, sources said in September.

The firm offers ticketing services through its Maoyan and Gewara apps in China - the world's second-largest movie market after the United States - and mainly distributes domestic films. However, it did help with the local distribution of the 2017 romantic drama The Shape of Water, which won four Oscars, according to its prospectus.

Maoyan's revenue almost doubled in the first nine months of 2018 to 3.1 billion yuan (S$535 million), the prospectus showed. It has yet to turn in a net profit, but its loss narrowed to 144 million yuan over the same period from 152.1 million yuan a year earlier.

Bank of America Merrill Lynch and Morgan Stanley were joint sponsors for the Maoyan listing. REUTERS