According to Reuters, Xiying has begun investor promotion and may begin the listing process in August to seek a valuation of 30 to 40 billion US dollars.
This is a decrease of nearly 60% compared to the 2022 $98.2 billion valuation of Series D financing.
As a result, the IPO of this global fast fashion “dark horse” has become a calculation problem.
First, Xiying must pay cash compensation to investors before the IPO for the valuation reduction.
According to the prospectus, Xiyin has experienced a total of 7 rounds of financing. Since 2022, the total nominal total of the three rounds of financing is about 3.8 billion US dollars, with pre-investment valuations of 60.5 billion US dollars, 98.2 billion US dollars, and 64 billion US dollars, respectively.
The agreement stipulates that if the listing is unsuccessful or the listing valuation falls, all investors have the right to redeem, and the three rounds of financing from 2022 will also receive cash compensation for the reduced valuation.
After the latest negotiations, investors since 2022 abandoned the listing market capitalization requirement and received compensation of 8% per annum from the date of entry to March 5, 2026, and the compensation annual interest rate rose to 12% from March 5 to the date of listing.
The total compensation for the first point in time is about 1.1 billion US dollars; the total compensation for the second point in time will also exceed 200 million US dollars.
If the IPO is valued at 40 billion US dollars and 10% of the shares are released after the IPO, the financing amount of Xiying's IPO would be 4.4 billion US dollars (the second largest amount raised in the Hong Kong stock IPO this year), but the cash compensation before the IPO would have already exceeded 1.3 billion US dollars.
Second, when the IPO valuation is lowered, Xiying must also provide weighted or premium compensation for investors' preferred share swaps.
Since its establishment in 2012, Xiyin has gone through 7 rounds of financing. The valuation grew from US$53 million to a maximum of US$98.2 billion, then fell back to the final D+ round of financing of US$64 billion.
The shares issued through these financing are all preferred shares and will be converted to common shares after the IPO. If the IPO valuation is lowered, it is higher than the preferred shares invested in the IPO valuation will be calculated according to the conversion adjustment mechanism and compensation for additional shares issued.
In addition, Series D investors received 1:1.5791 share conversion compensation due to subsequent financing revisions. Private equity fund Boyu is the largest buyer of Series D financing, accounting for $700 million of the $1.8 billion financing amount.
According to calculations, if calculated based on a valuation of 40 billion US dollars and the issuance of 10% new shares, these additional issuance and share transfers will have an additional share dilution effect of more than 3% for Xiying.
The four founders, Xu Yangtian, Miao Miao, Ren Xiaoqing, and Gu Xiaoqing, held 33%, 7.3%, and 7.3% of Xiyin's shares before the IPO. In addition, the trust jointly held by the four founders held 10.1% of the shares.
After the listing is diluted, Xu Yangtian's holdings are expected to be diluted to 28%, but his holdings are Class A common shares, and each share has 10 voting rights, so his voting rights will remain above 40%, and his control is worry-free.
As of May 31, 2026, Xiying had $3.69 billion in cash and cash equivalents, and $11.59 billion in short-term investments.
Xiying has almost no interest-bearing liabilities, but faces huge pressure to redeem preferred shares and cash compensation, so an IPO is imperative.
Since IDG entered the market with an investment of 5 million US dollars in 2014, the valuation went from 53 million to 98.2 billion dollars and then returned to 64 billion US dollars in ten years.
Using a roller coaster curve, Xiying finished the harshest story in the era of cross-border e-commerce traffic dividends.
Complicating the story is Temu, owned by Pinduoduo, airborne in the US at the end of 2022 to fight closely with Xiyin. Xiying can only accelerate financing expansion, and the cost growth rate gradually far exceeds the revenue growth rate.
What is more difficult is the policy. The US abolished tax exemptions for small packages in 2025, and the US market, which once accounted for 30% of the revenue, declined rapidly, accounting for only 22.5% of revenue in the first quarter of this year.
The EU market, which also accounts for 30% of Hiyin's revenue, will also increase the levy of tariffs. Xiyin admits that the future impact will be similar to that of the US market.
In the first quarter of 2026, Xiying had a net loss of US$99 million. Its 2025 revenue was $41.85 billion and net profit of US$2.06 billion.
Xiyin's path to listing has had its ups and downs. From the first rumored New York to London to now finalizing Hong Kong — behind the three changes, there are multiple clashes between data security reviews, supply chain compliance questions, and geopolitics.
As far as Xiyin is concerned, the IPO cannot be delayed any longer. December 31, 2026 is a hard constraint. If it cannot be completed before then, the redemption obligation will be activated.
Valuation can be cut short, compensation can be given, dilution is acceptable, but if it cannot be listed, the costs are unbearable.
As to whether it will break out, in the face of a downward trend in revenue and profit, a price-earnings ratio of 20 times or more will be a calculation problem for new investors.
This article is reprinted from Hong Kong Stock Banknote Shredder, Zhitong Finance Editor: Chen Wenfang.