What is the future of Smart Share Global, the "top player" in shared power banks, amid the major changes?

In the capital market, the criteria for judging a good company have never been singular. However, most of the time, leading investment institutions are regarded as "smart money" in the market, and their movements often attract widespread attention and even imitation. This is because large investment institutions typically have professional research teams and strong information-gathering capabilities. They formulate long-term investment strategies based on factors such as the macroeconomic environment, industry prospects, and company valuations, making their investment decision-making processes more scientific and systematic.

Currently, the global situation is complex and unpredictable, with profound adjustments continuing in industrial development and division of labor patterns. In a market environment intertwined with complexity and uncertainty, the movements of leading investment institutions, as market "barometers," are particularly worthy of investors' attention.

Not long after the start of the year, during this transitional period, significant news emerged from the Chinese concept stocks. Smart Share Global (EM.US) announced that its board received a preliminary non-binding proposal from "Xincheng Capital," a subsidiary of CITIC Capital, and the company's management on January 5. The proposal indicated that the acquirer would purchase all of Smart Share Global's American Depositary Shares (ADS) at a price of $1.25 per share, representing a premium of approximately 74.8% over the company's last closing price before the announcement.

Xincheng Capital is derived from the private equity investment department of CITIC Capital, known as the "Blackstone of China," and its industry position and professionalism need no further emphasis.

As the "first stock of shared power banks," Smart Share Global has had many highlights along its journey. However, in the past two years, due to changes in the market environment, increased industry competition, and various internal and external factors, the company's original growth rhythm has been disrupted, leading to an increase in various "noises" in the market.

Moreover, it is needless to say that in recent years, the performance of Chinese concept stocks has generally been under pressure due to a series of negative factors, including the Federal Reserve's tightening monetary policy, the depreciation of the RMB, and reduced investor expectations. Under these circumstances, it is not surprising that Smart Share Global's stock price trends and liquidity situation have not been satisfactory.

Although the "noise" in the market has not completely dissipated, Xincheng Capital still chose to privatize Smart Share Global at a high premium at this time, which raises intriguing questions about their intentions.

From my observation, when viewed from a global perspective, there are numerous cases in the capital market where investment institutions operate against the market trend and ultimately achieve excess returns. Take Warren Buffett, for example; after the global financial crisis in 2008, Bank of America faced massive losses, lawsuits, and high provisioning pressures, leading to a significant drop in its stock price and extreme market pessimism. However, at that time, Buffett purchased $5 billion in preferred shares of Bank of America through Berkshire Hathaway, which later proved to be a highly profitable investment.

From countless similar cases, it is not difficult to conclude that when market expectations are overly uniform, some potential value clues are often overlooked, and this may also be a moment that gives rise to new business opportunities.

Looking back at Smart Share Global, it is undeniable that for a long time, the company was in a "chaotic" period of performance bottoming out and attempting business diversification. During this phase, external investor expectations were confused, and there was a lack of clarity regarding the company's development prospects and valuation positioning. Coupled with the overall pressure on Chinese concept stocks, it is indeed understandable that Smart Share Global's stock price trends have not been ideal However, on the one hand, various apparent negative factors have actually been fully digested by the market. Even if Xincheng Capital has no intention of privatizing, the stock price of Smart Share Global has probably already fallen to its lowest point.

Aside from the aforementioned negative factors that have been fully priced in, many structural highlights of Smart Share Global may have been intentionally or unintentionally overlooked by the market. For example, the validated effective business model of Smart Share Global, its long-term accumulation in the mobile power product supply chain, and its rich market expansion experience are all important competitive advantages that deserve recognition. Additionally, as of the end of the second quarter of last year, the company had cash and cash equivalents, short-term investments, and restricted cash amounting to 3.2 billion yuan, which means the company can maintain financial flexibility for a long time and support subsequent business expansion and external investments.

Considering that Xincheng Capital has a wealth of successful cases in the field of mergers and acquisitions, especially the impressive results delivered by McDonald's China in recent years, which has demonstrated to the world how to reignite strong growth vitality in a multinational enterprise. With such precedents, Zhitong Finance APP believes that after successfully privatizing Smart Share Global, a series of chemical reactions worth looking forward to will occur between the two parties.

Of course, the offer made by Xincheng Capital and the company's management is still a preliminary non-binding proposal, and there remains uncertainty regarding the privatization of Smart Share Global; looking further ahead, it is still too early to conclude what kind of sparks will fly between Xincheng Capital and Smart Share Global. Although everything is still in a "half-hidden" ambiguous state, the fact that leading investment institutions have extended an olive branch to Smart Share Global after comprehensive consideration is probably enough to indicate many things. As for the progress of Smart Share Global's privatization, Zhitong Finance will continue to monitor