Thomas BabychanThe Chinese tech company, Hygon Information Technology Co., had a splendid listing on STAR Market of the Shanghai Stock Exchange as the share value of the tech company increased by nearly 100% during the first trading session.
Hygon Information Technology Co, based in Beijing was founded in 2014 with the business of research, development, manufacturing, and distribution of various computer components and parts. The components included a Central processing unit (CPU), Drive Control Unit (DCU) and High processing chips to make a few. Almost 300 million shares of the company were put on sale on stock exchanges.
The trading of shares which started at 36 yuan per share went as high as 73.8 yuan during the day to post an increase of 105% in the stock value.
Within one day, Hygon Information Technology Co Limited raised nearly 1.6 billion dollars, making it the second-largest growth of stock value on the first day on STAR Market. The top position for highest growth on the first-day session is with a Shanghai-based solar panels manufacturer named Jinko Solar.
Jinko Solar which got listed on STAR Market in 2022 saw an increase of 111% in its share values to raise an amount of 1.5 Billion dollars within one trading session.
The Beijing-based company executed this year’s third-largest listing in the Asian country, where big offerings are flourishing despite a slump in traditional IPO venues. Mainland China IPOs mostly target local investors as capital controls make it harder for foreigners to participate, and they tend to pop when trading begins.
The stock will trade with no price limit in the first five sessions. It trimmed gains to 80% as of 10:23 a.m. local time, heading for the second-best first day pop among Chinese listings larger than $1 billion this year.
About 80% of debuts on mainland China bourses of offerings that raised at least $500 million ended their first session in positive territory, data compiled by Bloomberg show.
Hygon’s share sale counted on strong demand from individuals and funds, with tranches reserved for retail investors oversubscribed by more than 2,500 times.
The issue price translates to a 315.2 times price-to-earnings ratio as of the end of 2021, according to a company filing. That compares with an industry average of 27.7 times.
In June 2019, the US Department of Commerce included Hygon on a list that requires US companies to seek government approval before selling goods or services to such entities, according to the prospectus of the offering.
Proceeds will be used for research and development and a technology development reserve fund, among other things, according to a statement to Shanghai’s exchange.
CITIC Securities Co. is the sponsor of Hygon’s IPO.