Ant Group IPO: 3 key investment themes ahead of listing
Ahead of Ant Group’s IPO, we examine three things that prospective investors should take note of.
- Ant Group is aiming to raise US$30 billion through dual listing
- This will be the largest IPO ever, surpassing Saudi Aramco's launch last December
- Shares of Alibaba – Ant’s parent company – soared past US$300 this week
1. Alibaba stock broke through US$300 this week
Alibaba Group’s Hong Kong shares posted a new record price this week, ten months after launch.
The Chinese e-commerce titan’s stocks hit HK$292 (US$37) a share on Thursday 03 September 2020.
This follows its US listing’s performance a day earlier, when share price broke through a key resistance level to hit a new all-time high of US$301.
Ever since Alibaba Group’s fintech offshoot Ant Group announced its plans to list on the Shanghai and Hong Kong stock exchanges, the e-commerce giant’s share price has soared to record highs.
In the last two weeks alone, Alibaba’s US and Hong Kong share prices have rallied around 15% respectively.
Better-than-expected quarterly earnings have also helped to boost Alibaba’s market cap by some 20% in the month of August alone.
If Alibaba’s current stock rally is any indication of things to come, Ant Group’s upcoming IPO looks set for a big debut.
Ready to buy or sell Alibaba stock?
2. Ant Group gunning for the world’s largest IPO crown
Ant Group is reportedly targeting a share sale of roughly US$30 billion – which would make it the largest IPO in history, overtaking Saudi Aramco’s US$25.6 billion offering last December.
Analysts have also put the flotation’s estimated market valuation at about US$225 billion.
The company stated that it plans to sell at least 10% of its enlarged share capital in the dual listing. If exercised, an over-allotment option (at 15% of total equity), called a ‘greenshoe’, could also lift the total capital raised to around US$33.5 billion.
Ant Group is also planning to raise more funds on Shanghai’s STAR Market than on the Hong Kong Stock Exchange, people close to the matter said.
While Ant did not furnish any specific details on the simultaneous listing, the sources said the IPO’s team leads have approached many Chinese institutional investors to invest in the STAR lots.
The IPO managers are hoping that these parties would come on board as strategic investors, by committing at least 1 billion yuan to 1.5 billion yuan each for a minimum lock-in period of 12 months.
Ant has also set a placeholder amount of 48 billion yuan (US$7 billion) for the Chinese tranche as a pre-sale indication of the Shanghai float size.
3. Ant Group posted a 1000% profit growth
It is worth noting for potential investors that the payments company reported a profit of 21.9 billion Chinese yuan (US$3.2 billion) on total revenues of 72.5 billion yuan (US$10.6 billion) for the first half of 2020.
This represents a more than 1000% year-on-year growth in profit. In the first half of 2019, Ant brought in 1.9 billion yuan (US$278 million) in profit, alongside a revenue of 52.5 billion yuan (US$7.7 billion).
According to an official exchange filing submitted last Tuesday (25 August 2020), the group’s flagship product – Alipay, a mobile payments app – has achieved over one billion annual active users as of 30 June 2020.
Alipay has also processed 118 trillion yuan (US$17.3 billion) worth of domestic transactions for the 12 months up to 30 June 2020.
The platform also has a growing international footprint, experiencing an annual transaction volume of 622 billion in markets outside of China during the same period.
Another detail worth pointing out is that Ant is not as dependent on Alipay’s sales as before. Two years ago, Alipay contributed 50% of Ant’s total revenue. This fell to 36% in the first half of 2020.
How to trade Alibaba with IG
Are you feeling bullish or bearish on the Alibaba share price?
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
Seize a share opportunity today
Go long or short on thousands of international stocks.
- Increase your market exposure with leverage
- Get spreads from just 0.1% on major global shares
- Trade CFDs straight into order books with direct market access
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.