In August, there were 3 new stocks listed on the Hong Kong IPO market. Although this number is relatively small compared to the 10 listed in July, the performance in August this year is considered positive compared to no new stocks listed in August 2023.

In the first 8 months of last year, there were a total of 37 new listed companies in the Hong Kong stock market. According to the latest data released by the Hong Kong Stock Exchange, up to now, 43 companies have successfully listed this year, with 41 of them on the main board. From this perspective, the overall IPO market in the Hong Kong stock market is more active than the same period last year, showing signs of gradual recovery.

However, the market subscription sentiment for these 3 new stocks is weak, with the highest subscription multiple being 16.07 times, and one new stock experiencing a first-day drop in price.

Nanfang Black Sesame Group's smart startup encounters obstacles: is the '18C' halo fading?

As mentioned earlier, the new stock that experienced a first-day drop in price is the second stock of '18C' - Nanfang Black Sesame Group.

It is reported that Nanfang Black Sesame Group is a major player in the domestic autonomous driving AI chip field, with two series of chips: the Huashan series high computing power SoC and the Wudang series cross-domain SoC.

In terms of market share, according to the relevant information from research institution Frost Sullivan, based on the shipment volume of high-performance SoCs for vehicles in 2023, Nanfang Black Sesame Intelligent is the third largest supplier in the world.

In fact, the company's listing process has also been turbulent. Initially, the company planned to go public on the STAR Market, but at that time, the A-share market had strict access requirements and the A-share IPO market continued to tighten. In the end, the company turned its attention to the Hong Kong stock market. In January last year, the company began preparing for its listing plan, and on June 30 of the same year, it submitted its first application, but it was unsuccessful. In March of this year, the company submitted its application again and finally successfully listed in August.

Originally, it was expected that the first listing of Nanfang Black Sesame would be as brilliant as the first "18C" listing of Crystal-Optech, but the performance of Nanfang Black Sesame's first listing surprised investors.

On August 8th, the opening price of Nanfang Black Sesame Intelligent was HK$18.8, a decrease of 32.86% from the offer price. The lowest price of the day was HK$18.28, and the highest price was HK$22.8. The final closing price was HK$20.45, a decrease of 26.96% from the offer price. At the closing price, one board lot had a paper loss of HK$755, and if sold at the high point, a paper loss of HK$520 per board lot.

In fact, even during the subscription period, it was apparent that the company's subscription sentiment was significantly lacking. The public offering portion only received a 2.52 times oversubscription, with a 100% allocation rate for one board lot. Subscribing for one board lot would guarantee receiving one board lot.

However, despite the initial setbacks, Nanfang Black Sesame Intelligence still has the potential to turn things around based on its performance. On August 28th, the company released its first interim performance report since listing. For the six months ending on June 30th, the company recorded a net income attributable to equity shareholders of 1.105 billion yuan, compared to a net loss of 3.729 billion yuan in the same period last year. Basic earnings per share were 15.1 yuan. The company achieved revenue of 0.18 billion yuan during the period, a 68.2% increase compared to the same period last year.

In addition, the overall gross profit for the period was 90.1 million yuan, an increase of 3.65 times compared to the same period last year. The overall gross margin increased by 31.8 percentage points to 50%. The gross margin of the autonomous driving products and solutions business increased by 34.3 percentage points to 47.2%, while the gross margin of the intelligent imaging solutions business increased by 39.1 percentage points to 86.6%.

The strong performance has already led to a rebound in the stock price of Nanfang Black Sesame, with the highest point approaching the offer price. If it can continue to perform stably, the future looks promising.

Tongyuan Kang Pharmaceuticals receives the 'investment and personnel' support from Huiyu Pharmaceutical.

The best performing stock on the first day of listing is Tongyuan Kang Pharmaceuticals, a biopharmaceutical company currently in the clinical stage.

Since its establishment in 2017, the company has built a pipeline consisting of 11 candidate drugs, including the core product TY-9591, six clinical-stage products, and four pre-clinical stage products. The company is currently conducting a crucial phase II clinical trial of TY-9591 monotherapy in China, using it for the first-line treatment of non-small cell lung cancer (NSCLC) with brain metastasis caused by epidermal growth factor receptor (EGFR) mutation. It is also conducting a registration phase III clinical trial of TY-9591 monotherapy in China, using it for first-line treatment of locally advanced (stage IIIb or IV) or metastatic NSCLC caused by EGFRL858R mutation.

As a pharmaceutical company that has not yet launched any products for sale, Tongyuan Kang Pharmaceuticals' performance is naturally in a loss state. According to the recently released interim report, the loss has expanded to 0.219 billion yuan for the six months ending on June 30, compared to a loss of 0.174 billion yuan in the same period last year; and the loss per share is 0.68 yuan. The R&D cost of the company in the period reached 0.138 billion yuan, a year-on-year increase of 15.3%.

Although the company's profit prospects are not yet evident, it has still garnered considerable favor from many capital sources. Since its establishment, the company has completed six rounds of financing, and its post-investment valuation has increased from 0.13 billion yuan in 2018 to 3.084 billion yuan in 2023. The investors include Yida Capital, Zhejiang Venture Capital, and others. In the D-round financing in 2023, Huiyu Pharmaceutical and China International Capital Corporation respectively subscribed to 5.2343 million shares and 10.4686 million shares for 50 million yuan and 100 million yuan, with shareholding proportions of 1.62% and 4.24% respectively.

It's worth noting that Huiyu Pharmaceutical, which is listed on the Sci-Tech Innovation Board (STAR Market), not only 'invests' but also 'puts people': starting this year, the chairman of Huiyu Pharmaceutical, Ding Zhao, took on the role of a non-executive director of Tongyuan Kang Pharmaceuticals, responsible for providing strategic advice for its development.

However, on August 6, Ding Zhao wasinvestigated for suspected short-term trading. Fortunately, this event did not have a negative impact on the listing of Tongyuan Kang Pharmaceuticals. It closed with a 13.22% increase on the first day of listing on August 20, reaching a highest price of 15.96 Hong Kong dollars, and a quick sale at a high level could earn 1930 Hong Kong dollars. Additionally, the cumulative increase in the four trading days after its listing reached 49.17%.

Backed by the 'Haier Group', Zhongmiao Holdings shows 'solid' performance.

Zhongmiao Holdings is a provider of insurance agency services and solutions, with Haier Group indirectly holding approximately 60.44% of Zhongmiao Holdings' voting rights, of which approximately 52.88% is held through Qingdao Haiyinghui and approximately 7.56% is held through Qingdao Haichuanghui.

Due to the endorsement of Haier Group, the company's performance has been steadily growing. In 2021-2023, the company's revenue was 0.12 billion yuan, 0.148 billion yuan, and 0.174 billion yuan respectively, with corresponding net profits of 26.992 million yuan, 36.349 million yuan, and 38.993 million yuan.

The recently released interim report shows that for the six months ended June 30, 2024, the company's attributable profits to equity shareholders amount to 21.588 million yuan, a 5.3% year-on-year increase; basic earnings per share are 0.20 yuan. During the period, revenue was 88.456 million yuan, an 8.4% year-on-year increase.

Based on the fast expansion speed and stable profit capability, the company's performance has been steadily growing, gaining favor from many investors. During the subscription period, the company received a 16.07 times oversubscription in the public sale stage, with a first-hand allotment rate of 50%, requiring subscription to 10 lots to secure one lot.

However, under the 'integration of reporting and auditing' system, the company's gross margin is declining, decreasing from 45.3% in 2022 to 42.8% in 2023, and further dropping to 42.4% in the first quarter of 2024.

In the first half of this year, the company's overall gross margin decreased by 2.1 percentage points year-on-year to approximately 42.0%. The announcement mentioned that this was mainly due to the gross margin of the company's insurance agency business decreasing from 42.6% in the same period last year to 40.5% in the current period.

On the day following the company's stock listing, the closing price of the stock plunged, down by 17.41% to 6.07 Hong Kong dollars, falling below the issue price of 7 Hong Kong dollars.

Under the '18C' threshold, Midea Group's news indicates that the attractiveness of the Hong Kong IPO market has been further enhanced.

"The recovery of the Hong Kong IPO market" is still a long-standing issue.

On August 23, the Hong Kong Securities and Futures Commission and the Stock Exchange jointly announced a series of short-term modifications to the listing rules for special technology companies and special purpose acquisition companies (SPAC). These adjustments are aimed at responding to market feedback, reflecting changes in the market environment, and are expected to further enhance the attractiveness of the Hong Kong stock market. This adjustment will temporarily apply for a period of three years, from September 1, 2024 to August 31, 2027 (implementation period).

According to the new regulations, the minimum market value threshold for special technology company listings in the Main Board Listing Rules will be significantly lowered. Among these, the market value threshold for commercialized companies will be reduced from 6 billion Hong Kong dollars to 4 billion Hong Kong dollars, a decrease of 33%; while the market value threshold for non-commercialized companies will be decreased from 10 billion Hong Kong dollars to 8 billion Hong Kong dollars, a decrease of 20%.

According to Hurun Research Institute's "2024 Global Unicorn List", the number of global unicorn enterprises has reached 1453, distributed in 53 countries and 291 cities, with China ranking second at 340, adding 24 in 2023. This also means that there are still abundant potential resources for the listing of special technology companies. Market analysis indicates that the Hong Kong Exchanges and Clearing's reduction of IPO market value thresholds for special technology companies is conducive to attracting more companies to list in Hong Kong.

In addition, as a significant news in August, Midea Group applied for a hearing for listing on the Hong Kong Stock Exchange on August 30, with China International Capital Corporation and Bank of America Merrill Lynch as the joint sponsors. Midea Group plans to raise $2 billion to $3 billion through this Hong Kong listing, and is expected to officially land on the Stock Exchange as early as September. This is likely to become the largest IPO project in the Hong Kong stock market this year.

【Conclusion】

By lowering the market value threshold for the listing of special technology companies, the Hong Kong Stock Exchange has not only responded to market demand but also followed the trends of the current market environment. This will undoubtedly help attract more high-quality companies to choose to list in Hong Kong. In addition, with the imminent entry of industry-influential companies such as Midea Group into the Hong Kong stock market, it is expected to further activate the market's vitality and may lead a new wave of listing frenzy, injecting new momentum into the recovery of the Hong Kong IPO market.

Recent filing situations are as follows:

Source: Hong Kong Stock Exchange Compiled by: Jinwu Financial News