28 Sep 2017 What IPO cases tell us

Today,28 Sep 2017, is the listing date of ZhongAn Online 6060.HK with the listing price of $59.7, which is extremely expensive compared to the profit performance of the company. There are two reasons making this stock such a high listing price, including the industry the company is involved and the star investors who subscribed for the new shares.

ZhongAn is a fin-tech company involving in the online insurance business. After the outstanding performance of technology companies, including Tencent, 2018.HK, 2382.HK, etc, the market usually provided a high premium price to them. However, the implication of this IPO to me is that the stock market is already at the peak so that the company would like to have IPO at this time to enjoy high premium price. Similarly, in October 2019, another famous company China Literature Limited is preparing for its IPO. It used to be a part of the Tencent business and now Tencent decides to divide it into another listed company. Enjoying the reputation of Tencent, the market also offers a very high premium price to CLL with a PE ratio of over 900 despite its poor profit performance in the past 3 years. From these two IPO cases, I think that both companies are intended to choose autumn as the IPO date so as to gain the maximum capital from the market and their IPO show that it is the time for investors to consider selling all their stocks.

 Apart from the stock market, there is also a personal experience I would like to share. When backing home yesterday(27 Sep 2017), there was a dragonfly in the home and, according to its flying pattern, it was obvious that it lost its way to escape from this house. Hence, I decided to help it and used a paper to hit the wall so as to make some sound which provided it the flying position. Then the dragonfly moved to the toilet and I turned on the exhaust fan and hoped that the wind flow could give it some hints about the position of the window which is the exit. Unfortunately, the stupid dragonfly might think that exhaust fan was the exit and it hit the rotating fan, which caused its life. This story tells me that sometimes we may finally do a bad thing even if our intention at the beginning is to do something good. There are many things out of our control and far from our expectation. What we need to do is to accept the truth and think what we can improve so that the similar tasks could be done better.