SenseTime’s stock price plunged, falling 45%, breaking the issue price for the first time – yqqlm

It was reported on June 30 that SenseTime lifted the ban on restricted shares today. After the opening of Hong Kong stocks, SenseTime’s share price plunged, and the share price once dropped to HK$2.91. As of press time, Shang Tang reported HK$3.25, a drop of nearly 45%, with a market value of less than HK$110 billion. This also means,Since SenseTime was listed at the end of last year, its share price fell below the issue price of HK$3.85 for the first time.

This morning, Shangtang Technology announced on the Hong Kong Stock Exchange that the company’s executives Xu Li, Wang Xiaogang, Xu Bing and several management members of the company voluntarily promised not to sell the company before December 29, 2022. The total number of 20.02 100 million Class B shares (approximately 5.98% of the total issued shares). The aforementioned members stated that these voluntary lock-up undertakings were made to express their confidence in the company’s long-term value and prospects. At the same time, all outstanding Class A shares of the company will be subject to a lock-up undertaking until December 29, 2022.

Although the company’s management announced an extension of the share lock-up period to express its confidence in the company’s long-term value and prospects. However, before the listing of Shangtang, investors and cornerstones involved 23.3 billion shares, accounting for 70% of the company’s total share capital. With the lifting of the ban today, the circulating shares on the market will greatly increase.

Just last week, the Macquarie Research Report reiterated SenseTime’s “underperform” rating and put it on the sell list, saying its current valuation is too high. The Macquarie research report pointed out that the price-earnings ratio (TTM) of global artificial intelligence companies has dropped from about 30 times in late December 2021 (when SenseTime was listed) to about 15 times currently. SenseTime’s share price has also pulled back 25% from its peak in January 2022 (HSI -6.5%), but its valuation (26.2x 2022 P/S) is still higher than its peers.

The bank believes this is due to limited free float (below 2%) and trading activity. Its current valuation and share price are too high. The bank lowered the company’s target price by 19% from HK$4 to HK$3.24, with a potential downside of 45.8%. The bank continued that it expects free float to increase to more than 60% after the June 30 pre-IPO share lock-up period expires. In addition, based on the final offering price of SenseTime’s Hong Kong stock IPO of HK$3.85 per share, its valuation (26.2x 2022 market-to-sales ratio) is significantly higher than that of software (6.9x) and AI (9.5x) peers Gap, heavy selling pressure. The bank lowered SenseTime’s 2022 revenue growth forecast from 34% to 29% year-on-year, slightly adjusted its 2023/2024 forecast growth to 38%/36%, and lowered its expected valuation to 10x 2023 market-to-sales ratio ( Previously at 16x 2022 sales).

“Shangtang Technology executives made a voluntary ban on sales and will not reduce their holdings before the end of this year”