China grid-equipment maker Sieyuan eyes Hong Kong listing after 665% surge

Shenzhen-listed Sieyuan Electric, a grid-equipment maker whose shares have surged about 665 per cent over the past five years, is planning a secondary listing in Hong Kong.\nThe move would give Sieyuan, already a favourite among overseas investors, more direct access to international capital as it pushes into global markets amid rising demand for grid upgrades driven by data centres and artificial intelligence.\nThe company said on Monday night it plans to issue new H shares equal to no more than 15 per cent of its total 778 million outstanding shares. It did not disclose a timetable or fundraising target in the exchange filing.\nCitibank estimated the listing could take place in the second half of next year, raising as much as 20 billion yuan (US$2.84 billion), based on assumptions including a 5 per cent discount to Sieyuan’s A shares and an offer price of about 147 yuan a share, according to a note by Pierre Lau Hin-tat, the bank’s China equity strategist.\nIf realised, the deal would rank as Hong Kong’s third-largest initial public offering over the past 12 months, behind Contemporary Amperex Technology and Zijin Gold International based on deal size.\nSieyuan did not immediately respond to the Post’s request for comment.\nFounded in 1993, Sieyuan’s products include switchgear, transformers, instrument transformers and capacitors, as well as energy storage systems, equipment increasingly needed to manage power networks as electricity demand rises.\nThe company’s shares are up 105 per cent this year, giving it a market capitalisation of 118.4 billion yuan, the second largest among mainland-listed grid-equipment makers.\nDriven by new overseas orders, Sieyuan’s revenue rose nearly 33 per cent year on year to 13.8 billion yuan in the first nine months, while net profit climbed 47 per cent to 2.2 billion yuan, it said.\nIn the first half, offshore sales jumped 89 per cent from a year earlier, growing faster than domestic revenue, according to the company.\nSieyuan has set up subsidiaries or invested in companies in more than 20 countries and regions, including Brazil, Mexico, Switzerland and Kenya. Last year, it also established a unit in the United States, aiming to capitalise on a transformer shortage in the American market.\n\nChina’s Belt and Road Initiative has also been a focus. Sieyuan said it had supplied grid and gas equipment to railway projects in Indonesia, Laos, Pakistan, Uzbekistan and Belarus.\nIn Africa, however, Sieyuan has faced reputational headwinds.\nThe company was debarred by at least three international financial institutions – the World Bank in 2019, the African Development Bank in 2020 and the European Investment Bank in June – over allegations including misrepresentation in bidding and “historical misconduct” in local projects.\nDespite that, Sieyuan has remained popular with foreign investors.\nJPMorgan Chase and Citibank rate the stock buy, with target prices of 180 yuan and 170 yuan, respectively, above Monday’s close of 149.19 yuan. Morgan Stanley set a higher target of 192.3 yuan and an overweight rating.\nMorgan Stanley & Co. International, a UK-based entity of the US bank, was Sieyuan’s fifth-largest shareholder with a 1.49 per cent stake as of September, according to filings.\nIn July, Sieyuan’s trading through the Shenzhen-Hong Kong Stock Connect was suspended after aggregate foreign shareholdings exceeded the 28 per cent cap. Buying resumed in September after the stake fell below 26 per cent.\nCitibank said the Hong Kong listing could help broaden Sieyuan’s foreign shareholder base and raise its international profile.\nSieyuan planned to use the proceeds for research and development, supply-chain investment, management and digital upgrades, overseas expansion and working capital, according to the filing.\n