SERES(SH:601127) Xin Lang Cai Jing·2025-11-05 10:15Core Viewpoint - The IPO of Seres in the Hong Kong market faced significant challenges, including high valuation concerns, weak market demand, and diminishing influence from its partnership with Huawei, leading to a precarious first-day trading performance [1][11]. Valuation and Pricing - Seres' IPO was priced at HKD 131.50 per share, reflecting a 22.7% discount compared to its A-share closing price of RMB 155.19, which is significantly higher than the typical discount for similar A to H projects [2][5]. - The high discount did not translate into strong market demand, as evidenced by the underutilization of the issuance adjustment rights, with only 56% of the additional shares being sold [4][6]. Financial Performance - For the first three quarters of 2025, Seres reported a revenue of RMB 110.5 billion, a modest year-on-year growth of 3.7%, while net profit was RMB 5.3 billion, showing a 31.6% increase [7]. - However, the third quarter saw a decline in net profit by 1.7%, indicating pressure on profitability despite a revenue increase of 15.8% [7][10]. - The company is projected to achieve a total revenue of RMB 178.2 billion and a net profit of RMB 10 billion for the full year 2025, but it has only completed 60% of its revenue target and 53% of its net profit target by the end of the third quarter [7][10]. Market Competition and Positioning - The competitive landscape in the electric vehicle market is intensifying, with major players like BYD and others increasing production and market presence, which has negatively impacted Seres' sales, which fell by 4.3% year-on-year [8][11]. - Seres' reliance on Huawei for its market positioning has diminished as other manufacturers have also partnered with Huawei, leading to a dilution of its unique value proposition [11]. Investor Sentiment and Market Reaction - The first-day trading volatility reflected a divided sentiment among institutional investors, with major foreign brokerages like Morgan Stanley and UBS net selling shares, indicating a lack of confidence in Seres' valuation and performance [12][14]. - The use of green shoe funds by CICC to stabilize the stock price on the first day did not signify market endorsement but rather highlighted the absence of sustained buying support [14][15]. Future Outlook - For Seres to stabilize its stock price and improve market perception, it must reduce its dependency on Huawei, enhance its independent R&D capabilities, and meet its financial targets to demonstrate its intrinsic value [15].