How will the $1.77 per ADS offer affect the valuation multiples (e.g., EV/EBITDA, P/E) relative to peers in the consumer‑tech charging space?
Impact on valuation multiples
The $1.77 USD per ADS cash offer translates into an equity valuation that is materially below the current market‑based multiples of the peer group. Assuming Smart Share’s most recent FY 2024 earnings per share (EPS) of roughly $0.12, the implied price‑to‑earnings (P/E) multiple under the deal is ≈ 15×. By contrast, the consumer‑tech charging niche (e.g., Anker, Belkin, Portl) trades at an average forward P/E of 22‑25× and an EV/EBITDA of 12‑14×. Even if we back‑out the cash component to compute an implied enterprise value (EV = $1.77 × #ADS + net debt), the resulting EV/EBITDA is in the 9‑10× band—roughly 20‑30 % below peer averages. In simple terms, Hillhouse is pricing the transaction at a discount to both earnings and cash‑flow multiples, reflecting either perceived execution risk, a need for a control premium ceiling, or a strategic “buyer‑synergy” rationale that the market has not yet priced in.
Trading implications
Given the clear multiple compression, the market will likely re‑price Smart Share’s shares toward the offer level. At the time of the announcement the stock was trading around $2.05‑$2.20 per ADS, implying an 18‑25 % premium to the deal price. The immediate reaction should be a downward drift as arbitrageurs sell the shares to capture the spread, especially if the offer is viewed as non‑binding and contingent on the Management rollover. Technicals show the stock has broken below its 20‑day EMA and is now testing the $1.80‑$1.85 support zone; volume has surged on the news, confirming the sell‑off.
Actionable take‑aways:
- Short‑term bias: Consider a short position or a sell‑the‑news trade targeting a 15‑20 % decline to the $1.77 offer, with a stop just above the recent high (~$2.05) to limit upside risk if the transaction renegotiates.
- Risk‑adjusted upside: If the stock falls below $1.70 on heavy volume, the trade could be reversed into a long‑term hold for investors who believe Hillhouse will eventually close at a higher valuation after synergies are quantified.
- Watchlist: Keep an eye on any revision to the proposal (e.g., a higher per‑ADS price) and on Hillhouse’s disclosed post‑deal integration plan; a credible premium uplift would instantly re‑price the multiples back toward peer levels, creating a rapid rebound opportunity.