26 March 2019

Nine companies line up to become the first to list on China’s new board

China has started counting down to the launch of a Nasdaq-style technology board after the Shanghai Stock Exchange (SSE) started accepting listing documents from nine initial public offering hopefuls operating in sectors ranging from chip making and robotics to new energy technology. Ideally, the new board is expected to take less than three months to evaluate applicants before granting approval, which will be in extreme contrast to the current, lengthy IPO system in place under the China Securities Regulatory Commission. Furthermore, not only will the new board adhere to a registration system, which means regulators cannot dictate a time of listing or even how much is raised, but it will allow some loss-making companies access to the capital market.

So, which companies are in the running to be among the first to float on this board? The slate of names comprises: fabless semiconductor company Amlogic, which is based in the US and China; infrared imaging firm Yantai Raytron; carbon-nanotube maker Cnano Technology; semiconductor manufacturer Hejian Technology; factory automation technology developers Guangdong Lyric Robot Intelligent Equipment and Jiangsu Beiren Robot System; lithium battery material supplier Ningbo Ronbay Material; medical device maker Ankon Technologies; and veterinary vaccine-to-drug developer Wuhan Keqian Animal Biological Product. They have all received a notice of acceptance, while the applications submitted by other hopefuls – including Xiamen Tebao Bioengineering, Fujian Fuguang, Shenzhen Guangfeng Technology and Shenzhen Besida Medical - are still being processed and inspected.

The first batch of applicants are expected to have an aggregate market capitalisation of CNY 7,280 million (USD 1,087 million), according to the SSE, and are generally different sizes and in different stages of development. Jiangsu-based Hejian Technology, which intends to sell a 10 per cent stake for CNY 2,500 million, is the only one yet to record a profit: it incurred a net loss of CNY 146 million in the 12 months ended 31st December 2018 (FY 2017: CNY 296 million loss; FY 2016: CNY 156 million loss). Interestingly, Hejian Technology is seeking to raise the most out of all the approved applicants, followed by Wuhan Keqian (CNY 1,747 million), Ronbay (CNY 1,600 million) and Ankon (CNY 1,200 million).

At the moment, a significant portion of mainland China’s largest technology companies are listed overseas or via offshore vehicles – think Alibaba or Tencent, both of which are incorporated in the Cayman Islands and which trade in New York and Hong Kong, respectively. Hopefully the introduction of this new, Nasdaq-style, technology board will tempt domestic companies to stay local, especially considering the support it has. He Yan, a Shanghai Shiva Investment fund manager, told the South China Morning Post: “The new market will see a strong buying interest from investors given its high profile and the support it receives from top officials. Regulators will still be concerned about roller-coast rides on the market when trading starts.”

© Zephyr