China's Trip.com raises up to $1.4 bln in HK secondary listing amid tourism recovery
Chinese online travel giant Trip.com Group Ltd. (9961) is raising as much as $1.4 billion (HK$ 10.9 billion) in its Hong Kong secondary listing, as a rebound in travel may lead to a business revival.
The public offer started on Thursday and would run through Apr.13, with trading expected to start on Apr.19, according to its listing document.
The Nasdaq-listed company (Nasdaq: TCOM) is offering 31.6 million shares at a maximum price of HK$333 apiece. That's a premium of 11% to its closing price of $38.55 (HK$ 299.88) on Nasdaq on Thursday. Each Trip.com's American depositary receipt represents one ordinary share to be listed in Hong Kong.
"Trip.com's secondary listing in Hong Kong could increase cash flow, diversify risk and attract more Asian investors amid growing tensions between China and the U.S.," said Zhang Xiao, an analyst from Great Wall Securities. "The domestic tourism is recovering strongly and the global tourism will gradually recover as more people having vaccinations. This will boost investor confidence and bring more opportunities for Trip.com to increase its market value."
The Shanghai-based company is among the growing cohort of U.S.-listed Chinese firms to carry out homecoming listings, including search giant Baidu which is Ctrip's single largest shareholder holding a stake of 11.5%. Total fundraising via new share listings in Hong Kong surged 822% to a record high in the first quarter.
Trip.com provides comprehensive travel products and services on its global one-stop travel platform, generating revenues primarily from the accommodation reservation and transportation ticketing businesses. Due to the severe impact of COVID-19 on the global tourism industry, the company's revenue in 2020 plunged 49% to 18.3 billion yuan (HK$ 21.74 billion), according to the prospectus. It also saw a loss of 3.3 billion yuan (HK$ 3.92 billion) after making a profit of 7 billion yuan (HK$ 8.32 billion) in 2019.
Benefiting from the containment of the COVID-19 pandemic in China starting from the third quarter of 2020, the company recorded net income in the third and fourth quarters of 2020, compared with the net loss recorded in the first two quarters.
According to the research by Analysys, a market research consulting firm, China’s travel market is expected to quickly recover from the impact of the COVID-19 pandemic and reach 10.1 trillion yuan (HK$ 11.99 trillion). The research also said that the global travel market is expecting a solid resurgence to the pre-COVID level in 2022 due to continuing rollout of COVID-19 vaccines, increasing consumer interest in travel, and rising consumer spending power.
Trip.com plans to use the proceeds from the listing to invest in technology, fund the expansion of its travel offerings, and improve user experience. JPMorgan, CICC and Goldman Sachs are the joint sponsors of the secondary listing.
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