希音估值从1000亿跌至260亿美元，赴港上市

And joining us now from Tokyo is Bloomberg News consumer finance reporter Lisa Du. Lisa, when I look back to 2022, company was worth nearly $100,000,000,000 privately. We were expecting it to maybe go public here in The US or London. Four years later, it's going public in Hong Kong at a valuation of about $26,000,000,000. Its brand isn't growing like it once did. Why is it going public now? Why is it going public in Hong Kong?

Hey. Good morning to you guys there in New York. Yeah. Like you I very good question. Like you said, you know, Xi in its heyday in 2022 was valued at 100,000,000,000 and now going public at 26,000,000,000. Why is it happening now? Well, it's a lot of it is timing and also regulation. So Xi'an is a Chinese company, and even though it does note business in China, it required the sign off from Chinese regulators to go public.

That never came. I was trying to go public in New York. It didn't happen. I was trying to go public in London. When they switched to Hong Kong, suddenly this summer, the okay came from Beijing that they could go public, and they just took the chance and ran with it. A lot of the early a lot of the early investors were getting very impatient for their exit, and they saw this kind of as their window of opportunity. But, again, you know, the falling valuation, obviously, through the years has been caused by the fact that, you know, the world was changing.

She was obviously a company that was built to take advantage of globalization, of no trade barriers, and the world we live now in is full of tariffs, very antagonistic messaging between countries. And so it's just not there's just not as much investor excitement for the company as it was back in the heyday. I wonder if it's also there's a bit of a stigma attached to fast fashion even though people are still guilty of it and they're still buying.

At least when I know people, I'll say, oh, where'd you get that? It's always a whisper. It's like, oh my god. I got I shouldn't say this, but I got a sham. You know, that's not something that you wanna hear as an investor that people don't literally wanna say the name of your company out loud. How much does that play into this as well? That's certainly a big factor here. You know, analysts you spoke to says Sheehan is much more sensitive to regulation image issues compared to some of its peer companies like Zara or H and M, for example.

This is a company that faced, you know, accusations of child labor and supply chain and use of cotton from the very controversial Xinjiang region region in China. It's been you know, you it's a big political flashpoint in The US. Many politicians have spoken out against it. And, actually, when they tried to list in New York, there was actually a lot of political backlash against it as well. And so all that also feeds into, you know, how the business has kind of, you know, faltered through the years.

And, Lisa, a big part of the whole IPO process is pitching. It's telling your best story possible. It's a branding opportunity. What's the pitch? Because I feel like this is a quite negative conversation that we're having right now from the company and from the bankers to investors. Yes. So we we throughout reporting our story, our our story of she and I had the IPO, we spoke to investors. We spoke to company insiders.

We got inside the pitch rooms and, you know, heard about what the company's the fees at this next phase of growth. You know, some of the things we heard about what she and it's planning for, you know, as it's pitching its IPO is that there's kind of acknowledgement that this this selling really cheap trendy goods, you know, on the She and brand can't sustain growth by itself going forward. So the company has been pitching this new alternative new business strategy where they are essentially going to buy or partner with other brands and put them on its own supply chain.

And they've they've kind of named this branded it being the Amazon Web Services of Fashion. You know, just like how you may be using a website or an app that you don't know that Amazon is hosting it, you could be buying a brand in the future and not know that Shein is actually the the manufacturer behind it, making it in China. But Xi'an sees this as a good as a potential to kind of bring on more brands onto, you know, onto its business and also to, you know, to to promote growth.

Obviously, this is a new strategy that they are pitching, and they they have a handful of brands that they own already, but it makes kind of less than 1% of its $52,000,000,000 50 sorry. $42,000,000,000 in revenue. And so this is kind of still a very untested strategy, but this is what they are pitching to investors as kind of we've got a new path forward, and we've got other ways we can grow besides just the brand. One of the ways they tried to grow one of those brands is they they tried to acquire Everlane, which come there have been complaints about quality recently, but when it launched was, you know, smaller collections, collections, more better materials.

It was, like, almost not quite slow fashion, but kind of the opposite of what you think of Shan. But it it was having some issues. So Shan tried to buy it, but that has now been held up by US regulators. What does that mean if this is part of their strategy and they're not able to implement it? Yes. A very good point, brother. So Everlane is we we think Everlane will be the biggest test of Xi'an's new strategy as it's going forward.

You know, Everlane was this beloved millennial brand that, you know, was really grew on the image of a very transparent supply chain and labor practice and sourcing. And then being and the Sheehan is kind of the exact opposite of Everlane. If Xi'Din is able to make Everlane a success story, then that will that will give some more strength to strategy. But we don't know that yet because, like you said, the the the deal had actually closed, but Xi'Din filed for review by after the fact, and we're not sure how that will turn out.

If CFIUS will think if, you know, does become problematic with US regulators, this could really put a dent in SHIUS plan to grow by acquiring other brands. As, of course, you know, you know, because that could really put it off from being able to buy other brands in The US going forward. So this is something that we are watching, and the review has not yet complete. Yeah. Lisa, it's interesting that you made a point that they're kind of reworking the pitch.

I feel like you never wanna do that when you're trying to go public. And just looking at the numbers, though, again, as you mentioned, more than $40,000,000,000 in net revenue last year, making it one of the five largest, in the world in terms of apparel and footwear. But when we compare it on a sales basis or we compare it using typical valuation metrics, yes, it is smaller than the likes of Azara or H and M, but investors would be paying a similar valuation.

So how should investors or how is Wall Street thinking through buying into a company that has all of the risks that we've been discussing when you can pay a similar multiple or similar valuation for that dollar of return from Azara, from an H and M? You hit that on you hit that right on the nail. That exactly what investors are saying, and that's like we've been discussing this whole time. That is one of the reasons why this IPO has not been as has not has as warm reception as I think some had hoped.

Investors do you know, they look at they look at Xi'Din, which is pitching themselves along peer companies like ZAR and HM, and they're like, well, you know, this Zaar and HM are companies that have years of track record that I can depend on. So why would I buy into a company like Xi'an? And the other thing that investors have had a lot of have had really questioned is how do I price geopolitical Mhmm. For Xi'an? This is a company that is, you know, way more sensitive to geopolitical risk, and how do I pric

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