(ATF) Travel booking site Trip.com Group Ltd will become another US-listed Chinese company to seek a secondary listing in Hong Kong, and will raise as much as HK$10.5 billion ($1.4 billion) to fund the expansion of its offerings as travel rebounds within its home market.
Nasdaq-listed Trip.com is offering 31.6 million shares, according to its a post-hearing information pack document posted on the Hong Kong stock exchange’s website on Wednesday.
It has set a maximum price of HK$333 for the portion of the deal reserved for Hong Kong retail investors. That price translates into more than a 6% premium to the company’s closing price in New York on Tuesday, prior to the announcement. The company plans to price the offering on April 13, Hong Kong time, the document says.
Trip.com’s American depositary shares (ADS) closed 3.4% lower on Wednesday to $38.80, giving the firm a market value of $23.3 billion.
The company plans to use the proceeds from the listing to fund the expansion of its travel offerings and invest in technology such as artificial intelligence, big data analytics, virtual reality and cloud technologies.
JPMorgan Chase & Co, China International Capital Corp and Goldman Sachs Group are joint sponsors for Trip.com’s listing.
4th HK 'return' listing this year
Trip.com is the fourth US-listed Chinese firm to seek a secondary listing in Hong Kong this year. Car selling platform Autohome, search giant Baidu, and video streaming service Bilibili raised a combined $6.4 billion in the first quarter.
The companies have been flocking to Hong Kong as a way to hedge against the risk of being delisted from US exchanges as a result of rising US-China tensions, as well as to bring in more Asia-based investors. Last year, such these secondary listings raised $17 billion.
Still, Trip.com’s share sale in the city comes as tech shares globally are losing their shine. Investors are rotating out of richly valued growth stocks into ones that are expected to benefit from a recovery of the global economy.
Baidu has dropped 12% from its listing price in Hong Kong, while Bilibili’s second-listing shares have risen 8.2% after a lacklustre debut which saw them close below their offer price.
Trip.com, which owns travel search website Skyscanner, reported revenue of 18.3 billion yuan ($2.8 billion) last year, a 49% drop year-on-year due to the Covid-19 pandemic. It lost 3.27 billion yuan in 2020 after making a profit of almost 7 billion yuan in 2019. While a recovery in international travel has been slow as the pandemic eases, travel within China has rebounded thanks to the country’ relative success in containing Covid-19.
The online travel company was initially known as Ctrip.com, but its bosses decided to change the name after acquiring a San Francisco startup in 2017 called "Trip.com". The name change became official in October 2019 as the company expanded globally, and their ticker symbol was also changed. But the company still operates Ctrip.com as its Chinese-language platform, and Trip.com is the international platform.
On Wednesday, Trip.com said its total bookings during China’s Qingming Festival holiday increased by three times year-on-year, with multiple business areas seeing volumes surpass those of pre-pandemic levels in 2019.
While Trip.com recorded a hiccup in its performance last year due to the pandemic, analysts from CCB International Securities expect the company to eke out market share gains by capitalising on a future domestic and global travel market recovery. They have raised their price target for Trip.com ADS from $37 to $39.90 while they remain cautious on its overseas business recovery in the near-term.
Analysts from Jefferies also think Trip.com is in a good position to embrace long-term opportunities.
“Compared to peers, Trip.com has maintained its talent in times of headwinds in order to be the first to embrace long-term opportunities ahead,” they said, adding that the company has demonstrated solid execution being the first travel company to launch live-streaming to help hotel suppliers cope during the Covid period.