Trip.com sets shares at HK$333 each at top end of price range as it kicks off US$1.4 billion secondary listing amid signs of a slow recovery in tourism

Georgina Lee
·4-min read

Trip.com has set its secondary listing at the top end of a range, offering its shares at HK$333 (US$42.95) each as it aims to raise US$1.4 billion in Hong Kong amid tentative signs of a slow recovery in leisure travelling.

The top end of its price range in Hong Kong translates to an 11 per cent premium to Trip.com’s closing price of US$38.81 at its primary listing venue on the Nasdaq market. The Shanghai-based company is selling 31.6 million shares in its Hong Kong initial public offering (IPO), starting the sale today until April 13, according to its prospectus. The company did not disclose the lower end of its price range.

Trip.com joins the steady exodus of US-listed Chinese tech company seeking secondary listings in Hong Kong since 2020, as a flood of capital by optimistic investors boosted valuations, amid an increasingly hostile US capital market driven by the brinkmanship policies in the waning days of the Trump administration.

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Total IPO proceeds raised in Hong Kong reached a historical high during the first quarter, totalling HK$132.8 billion across 32 deals, ranking the city’s bourse the world’s second-largest IPO globally after Nasdaq in terms of fund raised.

SCMP Graphics
SCMP Graphics

Still, some of the sizzle appear to have gone out of Hong Kong’s IPO debuts in recent weeks, with stocks such as the gaming and video stream platform Bilibili, and the Chinese internet search engine Baidu all trading below their offer prices when transactions began. The recent lacklustre first-day performance among Hong Kong new issuers and those elsewhere, such as food delivery start-up Deliveroo, which dropped 26 per cent as the worst IPO of the London Stock Exchange, has raised doubts about valuations of tech stocks in general and whether investors’ fervour for IPOs has waned.

JPMorgan, CICC and Goldman Sachs are the joint sponsors, global coordinators and lead managers of the deal. Each American depositary share is equivalent to one ordinary share. Trip.com will start trading on the main board on April 19, under the stock code “9961” on the main board. There is an overallotment option granted to the underwriters to sell up to 4.7 million shares to meet strong investor demand.

Like any other companies in the hospitality and travel industry, the revenue at Trip.com – it operates booking sites such as Ctrip.com, Skyscanner and Qunar – plummeted into the red last year as global travel grounded to a halt due to the impact of the coronavirus pandemic. The company swung to a 2020 loss of 3.3 billion yuan (US$503.8 million), from a 2019 profit of 7 billion yuan, citing domestic and international travel restrictions, and costs and expenses related with its users’ refund and cancellation requests.

The global travel market contracted last year by more than 50 per cent to US$2.6 trillion, from US$5.8 trillion in 2019, Trip.com said, citing research by Analysys. The industry is expected to rebound to the same pre-pandemic level in 2022, driven by continuing roll-out of Covid-19 vaccines, and rising consumer spending power, especially from emerging markets such as Asia, according to Analysys.

“As social and economic conditions gradually recovered from the Covid-19 pandemic within China, we observed an emerging demand for short-haul travel, local trips, and domestic boutique and premium accommodation experiences,” Trip.com said.

Trip.com, which is 11.5 per cent-owned by China’s internet giant and artificial intelligence company Baidu, plans to invest the proceeds from its fundraising in its technology and enhance its service offering. Baidu, the single largest shareholder in Trip.com, is subject to a 90-day lock-up period. Other substantial shareholders include US asset manager T. Rowe Price, and Morgan Stanley, with 6.2 per cent and 5.4 per cent stake respectively.

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