The stars, apparently, aren’t aligned for the Shenzhen-based handset producer’s public journey. Starting the first day on the Shanghai Stock Exchange Sci-Tech Board (or just the Star Market) at an impressive CNY 68.90 (USD 9.72) per share, Transsion (688036:SH) closed at more than ten yuan lower – CNY 57.65 (USD 8.13). Later on, the share price continued gradually slipping. It bottomed out on October 9, hitting CNY 46.90 (USD 6.62) – since then it has been hovering below the fifty-yuan bar.
Transsion, with both its marketing strategy and the product mix almost fully concentrated on localization, has been doing exceptionally well in various emerging markets around the globe. For one, in Africa, which once played the role of a cradle for the growing manufacturing giant, it retains a 54% share of the mobile phone market, holding three brand names: itel, TECNO and Infinix.
The strong sales indicators, along with some other stellar numbers recorded in the firm’s pre-IPO financials, ignited investors’ interest. As a result, the share price skyrocketed; the stock, consequently, started trading at nearly 60 times earnings (trailing twelve months method), which is, indeed, a special sort of achievement for a firm of this size (Transsion is the third biggest Shanghai tech board’s applicant by operating income).
This, however, turned out to be just a peculiar type of overshooting. Interest in Transsion’s newly listed stock fizzled in the blink of an eye; the company’s market capitalization thereby tumbled by 30.96%, reaching CNY 38.1 billion (USD 5.38 billion) on October 11.
The first week in the venue is officially over for the mobile device firm. It means that from now further possible stock price fluctuations will be limited by 20% up-or-down daily brackets. This rule is one of the new sci-tech board’s novelties, as previously both the Shanghai and the Shenzhen bourses had been operating under the plus-or-minus-10% limits. Still, the stocks currently listed on China’s mainland’s submarkets other than the Star board are circulating under the old rules as of October 12.
Read more about this and other improvements in the new submarket on the Shanghai bourse in the latest EqualOcean report (download).