Shein’s debut in Hong Kong was a mixed affair: it opened 10 per cent down before recouping its losses
It closed unchanged at 48.50 Hong Kong dollars, compared with an offer price of 48.56 dollars per share
(Il Sole 24 Ore Radiocor) - Shein’s debut on the Hong Kong Stock Exchange proved to be a mixed affair. After opening the session down 10 per cent and halving its losses by midday, the shares of the fast-fashion e-commerce giant closed flat at 48.50 Hong Kong dollars, compared with an offer price of 48.56 Hong Kong dollars per share (6.19 US dollars). The company raised HK$13.60 billion (US$1.74 billion) from the sale of shares during the placement.
The figure values the company at the equivalent of approximately 26.3 billion US dollars. The company was aiming for a valuation of around 27 billion dollars, a far cry from the nearly 100 billion dollars it was valued at in 2022 on the private market. As shown in the documentation submitted by the group to the stock exchange authorities, the portion of the IPO reserved for Hong Kong investors was oversubscribed 5.63 times, whilst the portion for international investors was oversubscribed 2.59 times.
The fall recorded on the first day of trading confirms the group’s uncertain outlook: analysts and financial reports attribute this performance to a number of structural and market-related challenges facing the group, after its plans to list on the New York and London stock exchanges also failed due to a failure to meet regulatory requirements. Shein’s success with consumers is based on affordable fashion characterised by extremely rapid production times, with deliveries from China to Western countries within a matter of days. The end of customs exemptions in the United States and the European Union has led to an increase in tariffs on low-value parcels from China, including Shein products.
The rise in logistics costs, due in part to the war in Iran, has also squeezed the margins of the company’s business model and profitability, which are based on low prices. In the first three months of this year, Shein recorded a loss of $99 million, compared with a profit of $395 million in the same period last year.
