How can Ping An's billion-dollar debut change the local IPO landscape?

The online healthcare platform is paving the way for lossmaking companies who want to go public.

Online healthcare portal Ping An Good Doctor, set to be Hong Kong’s largest IPO so far this year, is employing unconventional valuation metrics after it has been reported marketing its IPO with an estimated valuation derived from its future sales, according to Bloomberg. The company has reportedly been approaching potential investors with a valuation of as much as 9.38 times its estimated 2019 sales.

Using price-to-sale ratios to market public listings is rare in Hong Kong as most firms already have a track record of profitability. However, such tactics may gain more ground in the coming years as the bourse seeks to attract more “unprofitable” internet and biotech listings following liberalisation reforms.

The online healthcare platform has posted a considerable net loss at $1b yuan with a note in its filing stating that it may continue to incur negative operating cash flows in the future. The move paves the way for public listings of unprofitable or lossmaking firms that is set to change the IPO landscape in one of the world’s most competitive stock markets.

The Ping An Insurance (Group) Co. subsidiary will take investors orders from Monday through April 26, the prospectus shows. It aims to begin trading May 4.

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