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MarketScreener Homepage  >  Equities  >  Nasdaq  >  NetEase, Inc.,    NTES

NETEASE, INC.,

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Two Chinese Tech Firms Get Nod for Secondary Listing in Hong Kong -- Update

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05/29/2020 | 02:39am EDT

By Joanne Chiu and P.R. Venkat

Two of China's most valuable U.S.-listed companies have won approvals from Hong Kong's stock exchange for multibillion-dollar share sales in the city, amid pressure from U.S. lawmakers for greater financial scrutiny of Chinese companies.

NetEase Inc., an online-games company, on Friday put out a preliminary listing prospectus on the city's stock exchange website, after it received approval from the listing committee of the exchange operator to proceed with a stock sale ahead of a secondary listing.

The prospectus didn't disclose the timing of the IPO nor the amount NetEase is planning to raise. A person familiar with the IPO process had previously told The Wall Street Journal that NetEase may start taking orders from investors as early as next week and seek to raise between $2 billion and $3 billion ahead of a debut on June 11.

Separately, JD.com Inc., the operator of an e-commerce website, has also received the green light from the listing committee of the exchange operator, a person familiar with the situation told The Wall Street Journal.

JD.com plans to raise around $2.5 billion to $3 billion and start trading in Hong Kong on June 18, another person familiar with the situation told the Journal earlier this week. It will kick off the stock sale in Hong Kong during the week of June 8.

The fundraising plans by two U.S.-listed Chinese technology companies follow their bigger peer Alibaba Group Holding Ltd., which raised roughly $13 billion through a stock sale in the city last November.

The planned secondary listings come at a sensitive time for U.S.-listed Chinese companies. A bill passed by the Senate earlier this month--now introduced in the House--would kick Chinese companies off U.S. stock exchanges unless their audits are inspected by the U.S. Securities and Exchange Commission's audit-watchdog arm--the Public Company Accounting Oversight Board.

NetEase said in the prospectus that like other independent registered public accounting firms operating in China, its auditor "is not permitted to be subject to inspection" by the PCAOB, and consequently investors are deprived of the benefits of such an inspection.

It said the company may also be "adversely affected by the outcome" of any administrative proceedings brought by the U.S. security regulator against major mainland China-based accounting firms.

For the three months ended March, NetEase's net profit rose 49% to $501.5 million from a year earlier, while revenue increased 18% to $2.41 billion, the application showed.

NetEase's American depositary receipts have risen nearly 19% this year, giving it a market capitalization of nearly $48 billion as of Thursday. The equivalent securities for JD.com have risen 45% this year, giving it a market value of nearly $75 billion.

"I believe that returning to a market that is closer to our roots will further fuel our passion in our business and our users," William Ding, founder and chief executive of NetEase, said in a letter.

 

Write to Joanne Chiu at Joanne.chiu@wsj.com and P.R. Venkat at venkat.pr@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
ALIBABA GROUP HOLDING -3.58% 251.67 Delayed Quote.23.06%
AT HOME GROUP INC. -5.87% 5.61 Delayed Quote.8.36%
EURO / US DOLLAR (EUR/USD) -0.01% 1.13408 Delayed Quote.0.75%
JUST GROUP PLC -1.18% 48.48 Delayed Quote.-37.90%
NETEASE, INC., -1.54% 476.99 Delayed Quote.57.99%
SEEK LIMITED 1.12% 21.66 End-of-day quote.-3.95%
THE NEW HOME COMPANY INC. 6.95% 3.54 Delayed Quote.-28.97%
WILL GROUP, INC. 2.10% 631 End-of-day quote.-49.60%
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Financials
Sales 2020 69 963 M 9 998 M 9 998 M
Net income 2020 14 270 M 2 039 M 2 039 M
Net cash 2020 70 082 M 10 015 M 10 015 M
P/E ratio 2020 30,9x
Yield 2020 0,89%
Capitalization 461 B 65 922 M 65 908 M
EV / Sales 2019
EV / Sales 2020 5,59x
Nbr of Employees -
Free-Float 100%
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Mean consensus OUTPERFORM
Number of Analysts 35
Average target price 3 132,22 CNY
Last Close Price 3 336,97 CNY
Spread / Highest target 25,7%
Spread / Average Target -6,14%
Spread / Lowest Target -46,6%
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Managers
NameTitle
Lei Ding Chief Executive Officer & Director
Zhao Xuan Yang Chief Financial Officer
Ting Bun Lee Independent Non-Executive Director
Sui Bau Tong Independent Non-Executive Director
Lun Feng Independent Non-Executive Director
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