Shein is aiming for a valuation of up to $40 billion in its Hong Kong IPO — Reuters

Online clothing retailer Shein expects to be valued at between $30 billion and $40 billion as a result of its IPO on the Hong Kong Stock Exchange, Reuters reports, citing three sources. The company plans to launch the offering as early as mid-August, the sources told the agency.

With a valuation of $30–40 billion, Shein would be roughly on par with H&M, which is currently valued at around $26 billion, but significantly below Fast Retailing (owner of Uniqlo, $161 billion) and Inditex (Zara’s holding company, $208 billion), Reuters noted. Shein’s valuation would amount to 0.7–1 times its 2025 sales: for H&M, this ratio is 1.1; for Inditex, 4.6; and for Fast Retailing, 7.6, the agency calculated.

Shein is prioritizing a pricing level that will support the stock after the listing rather than one that will maximize its valuation, according to one of Reuters’ sources. According to him, some potential anchor investors are insisting on a valuation closer to $30–32 billion, he says. The new benchmarks represent a sharp decline in valuation: in 2022, during private funding rounds, Shein was valued at $98.2 billion, although by 2023 that figure had fallen to $64 billion.

Shein did not respond to a request from Reuters. The valuation target and IPO timeline are not final and may still change following meetings with investors that began last week, according to Reuters sources.

The company’s conservative sales estimates are due to Shein’s lower profit margins and weaker earnings predictability compared with its publicly traded competitors, according to Li Jianggan, founder and CEO of the consulting firm Momentum Works, as quoted by Reuters. “The range looks realistic, and the lower end is likely to find more support from investors than the upper end,” Li noted.

The two main reasons for the downgrade were the company’s decline in profits last year and the dependence of its business model on preferential rates for small packages, said Kenny Ng, an equity strategist at Everbright Securities International. However, he noted that there is limited room for further downward revisions to the valuation.

Shein was founded in China in 2012 and sells clothing in approximately 160 countries. Its headquarters are currently located in Singapore. Hong Kong became a fallback option for the IPO after the company’s plans to list in New York and London fell through. The company received approval from Beijing for its Hong Kong IPO on July 10. Shein reported a loss of $99 million in the last quarter, according to the company’s IPO prospectus.

This article was AI-translated and verified by a human editor