Hong Kong IPO Weekly Report: Alibaba Launches Spin-Off Plans as More “Micro-Innovation” Companies File for Listing

Hong Kong Stock IPO Weekly Report: Alibaba Launches Spin-Off Listing Plan! Another “Minimally Invasive” Company Files for Listing as Spin-Offs Become Trendy?

As of May 21, 2023, the Hong Kong stock market has welcomed a total of 25 new listings since the beginning of the year. In the past week (from May 15 to May 21), no companies went public, but two companies initiated their public offerings, one passed the hearing, and two submitted listing applications.

The two companies that started their public offerings are Hongxin Jianfa and Yidian Cloud. Hongxin Jianfa, a leading equipment operation service provider in China, was spun off from Far East Horizon (3360.HK) and aims to raise approximately 1.699 billion HKD. The company has attracted seven cornerstone investors, who will hold about 64.83% of the global offering. Growatt successfully passed the hearing; it is the largest provider of residential photovoltaic inverters worldwide, with a net profit growth of 82.13% year-on-year in 2022.

Additionally, Changjiu Shuke and Micron Heart submitted their listing applications to the Hong Kong Stock Exchange. Micron Heart, which is spun off from Micron Medical (0853.HK), focuses on cardiac rhythm management (CRM) and has secured investments from several institutions, including Hillhouse, CICC, and E Fund.

Notably, Alibaba announced several significant moves in its latest financial report: the spin-off of its Cloud Intelligence Group with the goal of completing the listing within the next 12 months; Cainiao Group aims to complete its listing plan within 12 to 18 months; and Hema intends to go public within 6 to 12 months. Additionally, market sources indicate that Shenzhen Wansheng Tang plans to list in Hong Kong this year, raising about 200 to 300 million USD. Wansheng Tang is the regional distributor of the Japanese condom manufacturer “Okamoto.”

New Listings

Number of New Listings: 0

In the past week, no new companies went public.

Public Offerings

1. Hongxin Jianfa (9930.HK): The public offering took place from May 12 to May 18, 2023, with an expected listing date of May 25, 2023, on the Hong Kong Stock Exchange. The global offering ratio for Hongxin Jianfa is approximately 11.41%, and it aims to raise around 1.699 billion HKD. The company has enlisted seven cornerstone investors, who will collectively hold about 64.83% of the offering.
2. Yidian Cloud (2416.HK): The public offering started on May 15 and will continue until May 18, 2023, with an anticipated listing date of May 25, 2023. Yidian Cloud provides comprehensive IT services to corporate clients, aiming to raise about 644 million HKD from a global offering ratio of 10.20%, with one cornerstone investor holding approximately 24.33% of the offering.

Passed Listing Hearing

Growatt: Growatt successfully passed the hearing on May 14, 2023, and will soon be listed on the Hong Kong main board. The joint sponsors are Credit Suisse and CICC. Growatt is a leading provider of distributed energy solutions, reporting 7.093 billion RMB in revenue for 2022, a 93.56% increase year-on-year, with a net profit of 1.213 billion RMB, up 82.13%.

Companies Filing for Listing

1. Changjiu Shuke: This company submitted its prospectus on May 16, 2023, for a listing on the Hong Kong main board. This is the company’s first application, with joint sponsors being CITIC Securities and ICBC International. It is the largest provider of digital risk management services in the automotive circulation sector in China, reporting 548 million RMB in revenue and a net profit of 96 million RMB for 2022.
2. Micron Heart: This company submitted its prospectus on May 18, 2023, intending to list on the Hong Kong main board. This marks its first application, with joint sponsors being Goldman Sachs and CICC. Micron Heart focuses on CRM medical devices and is the fifth spin-off company from Micron Medical (0853.HK) following several other medical device firms. For 2022, it reported revenue of 205 million RMB and a net loss of 107 million RMB.

Recent IPO Market Conditions

According to LiveReport big data, the average market capitalization for the last ten IPOs is 7.447 billion HKD, with the largest being Zhenjiu Lidu and the smallest Yijun Group Holdings. The average issuance PE ratio is 15.55, which is at a median level. There were on average 5828 applicants per IPO, with an average subscription multiple of 8.26. The average cornerstone investor ratio is 41.28%, which has slightly rebounded recently. However, the recent performance of Hong Kong IPOs has been poor, with an average increase of 5.79% in the dark market for the last ten IPOs, while the average first-day decline was 2.00%.

The stock of Zhongtian Hunan Group surged over 120% in the dark market and on the first day, while stocks like Huai Bei Green Gold, Zhong Bao New Materials, and Beisen Holdings experienced significant drops. Zhenjiu Lidu, the top liquor company in Hong Kong, faced a disappointing debut.