Breakingviews - Shein margin wobble takes bite out of IPO value

LONDON, Nov 14 (Reuters Breakingviews) - Shein’s planned stock-market float has always seemed dicey. The Singapore-headquartered fast-fashion group, which has Chinese roots, is exposed to rising Sino-U.S. tensions and environmental scrutiny. But a Donald Trump U.S. presidency and poor first-half results pose more pressing problems. To hit its most recent $66 billion private valuation, the company faces the tricky task of convincing investors that its issues are temporary.

The group founded by Chinese entrepreneur Chris Xu, and whose public face is Executive Chairman Donald Tang, is sticking with its plan for a London initial public offering. Tang has in recent weeks held meetings with investors, a person familiar with the matter told Breakingviews. The company also added UBS (UBSG.S), opens new tab and Barclays (BARC.L), opens new tab to the roster of banks working on its float, according to a Bloomberg report, opens new tab citing people familiar the matter, joining Goldman Sachs (GS.N), opens new tab, JPMorgan (JPM.N), opens new tab and Morgan Stanley (MS.N), opens new tab.

Tang and his bankers have a tough job on their hands. Valuing Shein is tricky, partly because of the range of listed possible comparable companies. Many large clothing groups trade at around 10 times 2026 forecast earnings, using Visible Alpha data, including Primark owner Associated British Foods (ABF.L), opens new tab and Gap (GAP.N), opens new tab. Fashion titan Inditex (ITX.MC), opens new tab, the $170 billion group known for its Zara stores, is worth 22 times consensus net income in two years’ time....
[Short citation of 8% of the original article]