From chips to noodles: the newcomers testing Hong Kong’s buoyant IPO market

Hong Kong’s booming fundraising market is set for another busy week, with four companies scheduled to debut this week and a string of billion-dollar listings – including Chinese luxury electric vehicle maker Avatr Technology – lining up behind them.\nAmong this week’s newcomers, chip materials supplier Guangdong Tianyu Semiconductor plans to raise the highest sum, seeking up to HK$1.74 billion (US$223.42 million) from the sale of 30.07 million shares.\nThe shares have been priced at HK$58 each. Ten per cent of the offer is earmarked for the public, with the remaining 90 per cent going to the international tranche.\nMeanwhile, Chinese noodle restaurant chain operator Guangzhou Xiao Noodles is aiming to raise up to HK$685.45 million, while massage services provider Lemo Services is targeting HK$222.22 million.\nAnhui Jinyan Kaolin, a kaolin miner and seller supplying the industrial-grade white clay for manufacturing, has sought HK$177.39 million, according to exchange filings.\nTianyu and Guangzhou Xiao Noodles will debut on December 5, while Lemo Services and Anhui Jinyan Kaolin were due to start trading on December 3. All four were primary listings.\nFounded in 2009 in Dongguan, Guangdong province, Tianyu manufactures silicon carbide epitaxial wafers, the third-generation semiconductor material used in high-voltage, high-temperature applications. Its production base is also located in Dongguan.\nThe company produces 4-inch, 6-inch and 8-inch silicon carbide wafers, with an annual production capacity of around 420,000 pieces for the 6-inch and 8-inch sizes combined.\nTianyu was China’s largest manufacturer of silicon carbide wafers by sales volume, holding about 32.5 per cent market share, the company said.\nCitic Securities, the top investment bank in China by underwriting revenue, was the sole sponsor for Tianyu’s deal.\n\nCornerstone investors had committed 120 million yuan from Guangdong Primitive Forest and GF Global, plus HK$30 million from Glory Ocean Innovation.\nAbout 62.5 per cent of the capital raised would be deployed for expanding its production capacity over the next five years, and 15 per cent would be used for enhancing research and development and innovation capabilities, with the remainder for acquisitions, expanding its global sales network, working capital and general corporate purposes.\nThe company recorded a net loss of 500.3 million yuan last year due to inventory writedowns after silicon carbide epitaxial wafer prices declined amid temporary oversupply.\nThe listings come as the city’s bourse operator hosted 66 companies raising US$23.27 billion in the first nine months, topping global league tables, according to London Stock Exchange Group data.\nMore mega deals are in the pipeline.\nChinese luxury electric vehicle maker Avatr Technology, created by Changan Automobile, Huawei Technologies and Contemporary Amperex Technology, filed on November 27 for a US$1 billion IPO, Reuters’ IFR reported, citing insiders.\nA day later, Shenzhen-listed Muyuan Foods, one of the world’s largest pork producers, submitted its application for a secondary listing targeting at least US$1 billion, according to Bloomberg.\nA slew of biotech firms is also flocking to Hong Kong to tap into the highly buoyant fundraising climate.\nTwo Chinese biopharmaceutical companies – Lynk Pharmaceuticals and Elpiscience Biopharmaceuticals – both backed by Lilly Asia Ventures, the venture capital arm of US drug giant Eli Lilly, have filed for IPOs.\nIn addition, Jingdong Industrials, the supply-chain technology arm of JD.com, passed its listing hearing for an IPO that could raise about US$500 million in the coming weeks, Bloomberg reported.\n