Chinese appliance maker JS Global Lifestyle Company is reportedly moving ahead with its planned initial public offering (IPO) in Hong Kong, seemingly undeterred by the looming threat of yet another round of tariffs by the United States.
The Hangzhou-based company generates close to half of its annual revenues from North America, which means that going public at such a geopolitically tense time is a big gamble. According to reports citing a term sheet from the company, JS Global is planning to raise as much as $332 million in its IPO. It plans to sell a total of 499.8 million shares priced at HK$5.20 per share.
The company does have an overallotment option for its shares, which means that if it chooses to use the option it can potentially raise up to $381.8 million during its IPO. Sources close to the matter have revealed that the company could announce its official pricing this Thursday, December 12, with trading formally starting on December 18.
The dates reportedly chosen by the company are somewhat peculiar as it does fall within the US' recently announced deadline for its new round of tariffs. The Trump administration previously stated that it would impose a new round of tariffs if both sides fail to reach a "phase one" trade agreement.
If the US does push through with its planned tariffs, it could spell trouble for the company as it does heavily depend on the North American market for the bulk of its revenues. In 2018, the company generated around 48.9 percent of its revenues from the US.
JS Global sells various types of kitchen and home appliances including blenders, mops, food processors, and fryers. In China, the company sells its products both offline and online. It does have standing partnerships with online platforms such as Alibaba's Tmall and offline stores such as Walmart China.
In North America, the company sells its products through its US-based partners, which include Target, Amazon, and Walmart. The company also acquired US-based company Shark Ninja in 2017, allowing it to directly sell robotic cordless vacuum cleaners in China and the United States.
Trump's tariff could result in a big dent in the company's bottom line moving forward as the company and its customers would have to deal with the added costs. JS Global heavily relies on its supply chain in China to produce its finished goods, which it then sends to the United States.
Investors are well aware of this fact, which means that the US' decision on whether or not it would push through with its planned tariffs could make or break the company's IPO in Hong Kong.
