Maoyan Posts More Than 1 Percent Drop on Hong Kong Debut

Movie ticketing platform Maoyan Entertainment traded in the red territory for its Hong Kong stock debut on Monday, falling more than 1 percent to become the latest Chinese tech company which had a weak start in the financial market.

Shares of Maoyan opened at HK$14.82 ($1.89), slightly higher than the initial public offering (IPO) price of HK$14.8m which was already at the low end of an expected range.

The stock was at HK$14.64 by the end of the session and had, at one point, dropped to as low as HK$14, a warning sign for other Chinese tech firms that could be considering IPOs after receiving large valuations in private funding rounds.

However, thin trading volumes in a truncated trading session on Lunar New Year’s Eve might have dragged Maoyan’s performance, according to co-head of research Ke Yan.

Yan said while on one hand there is a lack of demand for the name given the limited upside in the online movie ticketing market in terms of market penetration, on the other hand, the upcoming Chinese holiday season could be another contributing factor for the thin volume and the poor performance.

Maoyan Chief Executive Peter Zheng stated that they were not worried about short-term market fluctuations, adding that the most important is to create value for the industry and for their partners.

Further Down Rounds

Maoyan’s float is being monitored to gauge investor sentiment in Hong Kong deals, following a patchy performance by recently listed stocks last year amid the US-China trade tensions.

Investors are preparing for more downturns in the country’s much-hyped tech sector, as weak equity markets and slow growth in the world’s second-largest economy put the once-upbeat private markets under pressure.

Several companies like online food delivery group Meituan-Dianping and smartphone maker Xiaomi Corp., which raised billions of dollars in their listing, are trading below their IPO prices since their Hong Kong debut.

Seeing signs of a down round with the firm’s IPO, Chinese tech titan and Maoyan’s second-biggest shareholder Tencent Holdings Ltd. valued the group at $2.16 billion, which is over a quarter lower than the valuation achieved during its previous funding round in 2017.

Tencent owned about 16.3 percent of the movie ticketing platform ahead of the offering, while online Meituan-Dianping owned approximately 8.6 percent at the time.

Maoyan raised $250 million through its IPO, and if a greenshoe or over-allotment option is employed within the first month of trade, China’s largest movie ticketing app could raise $287 million, although that would only represent a small portion of the amount it was seeking to raise in 2018.

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