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China tech

ByteDance valuation soars despite China tech woes

Most in Hurun Global 500 rise in net worth while Alibaba leads declines

ByteDance, the parent of TikTok and Chinese sister app Douyin, posted the second-highest gains of the Hurun Global 500, with its valuation rising 168% to $280 billion.   © Reuters

SHANGHAI -- Valuations for ByteDance and Huawei Technologies have held up or even risen this year while the shares of many listed Chinese technology companies have tumbled amid Beijing's widening crackdown on the sector, according to a new ranking of the world's largest private sector companies.

The Hurun Research Institute in Shanghai said valuations for the world's 500 top private sector companies rose 17% to $58 trillion between Dec. 1, 2020 and July 15, with 428 making gains.

ByteDance, the parent of TikTok and Chinese sister app Douyin, posted the second-highest gains of the Hurun Global 500, with its valuation rising 168% to $280 billion, behind only American investment group Blackstone Group in percentage terms.

While ByteDance is not yet publicly listed, four Chinese companies with traded shares were also in the top 10 gainers among the Global 500: EV battery maker Contemporary Amperex Technology Ltd. (CATL), solar panel materials maker Longi Green Energy Technology and pharmaceutical development services companies WuXi AppTec and WuXi Biologics.

"I think what these companies have in common is their reliance on technology as their core value that potentially other companies have less," said Rupert Hoogewerf, Hurun chairman and chief researcher.

For listed companies, Hurun uses their market capitalization for its rankings. Unlisted companies are valued in reference to listed peers or their most recent financing round, according to a company spokesperson.

ByteDance, which raised about $5 billion in December at a valuation of $180 billion, recently revived plans to list in Hong Kong as early as the fourth quarter, according to The Financial Times.

A ByteDance spokeswoman, however, told Nikkei Asia this week that the company has no such plan.

ByteDance revenues more than doubled last year to about $34 billion from a year before.

By Hurun's calculation, Huawei Technologies' valuation stayed flat at $165 billion between December and July even as its smartphone sales crumbled with U.S. sanctions cutting off access to vital microchip supplies. Hoogewerf said the assessment reflected Huawei's performance in 2020 when its net profit rose 3.2%.

Online finance platform Ant Group fared much worse, ranking fourth in valuation decline among the Global 500 after the appraised worth of the Jack Ma-controlled private company sank 28% to $150 billion. New York-listed peer Lufax fell out of the Global 500 after its shares sank 44.6% over the reference period.

The Global 500's biggest loser, though, was Ant sister company Alibaba Group Holding, which saw its market value fall $126 billion as Beijing targeted the conglomerate for anti-competitive practices.

Fellow Chinese internet platforms KE Holdings, Tencent Holdings and Pinduoduo also figured in the top ranks for value loss, along with technology-focused Ping An Insurance Group. Each has felt pressure from Beijing's widening crackdown.

The highest valued newcomer on Hurun's list was short video service Kuaishou, which raised $5 billion in a Hong Kong initial public offering in February. Its shares have since fallen 42.8% amid the regulatory offensive.

While Hurun has not updated its valuation for ByteDance since July 15, Hoogewerf called its last assessment "questionable now" due to Kuaishou's share drop.

U.S. companies dominated the Global 500 overall, with Apple, Microsoft, Amazon.com, Alphabet and Facebook ranking above Tencent, China's most valued company. The rest of the top 10 included Alibaba, Taiwan Semiconductor Manufacturing Co. (TSMC), Berkshire Hathaway and Tesla.

"The world's most valuable companies keep getting more valuable, with the top 10 rising five times in the last decade," said Hoogewerf. "This concentration of economic power has gained the attention of governments, with reforms by the Chinese government hitting e-commerce platforms, financial technology and education stocks hardest."

Hoogewerf sees Hurun's rankings as more telling than the more-established Fortune 500, which ranks companies based on revenues.

He pointed to U.S. vaccine producer Moderna, which has a market value of $151.58 billion despite just $803.4 million in revenues last year and only 830 staff.

"The value is high because investors believe that it is going to grow very fast," he explained.

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