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Finance

China swoons over cleantech and biotech stocks

Stock market conditions are favorable for Chinese technology firms

by Jean-François Tremblay
June 14, 2018 | APPEARED IN VOLUME 96, ISSUE 25

 

Shares in the Chinese lithium-ion battery maker Contemporary Amperex Technology (CATL) surged 44% on their first day of trading on the Shenzhen Stock Exchange last week. The company’s performance mirrors that of other cleantech and biotechnology firms that listed in China and Hong Kong over the past year.

CATL, already one of the world’s largest producers of lithium-ion batteries, raised the funds to finance its expansion as demand for electric vehicles grows in China, it said in a filing to the Shenzhen exchange. The company picked a good time for its initial public offering (IPO), as the stock issue was priced at a healthy 23 times its annual earnings per share.

Auspicious times

Several Chinese technology firms had successful initial listings in the past year.

COMPANY
BUSINESS
AMOUNT RAISED
CATL
Lithium-ion batteries
$850 million
PharmaBlock
Custom drug ingredients
$32 million
Ping An Good Doctor
Online health care services
$1.1 billion
WuXi AppTec
Contract research
$900 million
WuXi Biologics
Contract manufacturing
$500 million

COMPANY:CATL

BUSINESS:Lithium-ion batteries

AMOUNT RAISED:$850 million

COMPANY:PharmaBlock

BUSINESS:Custom drug ingredients

AMOUNT RAISED:$32 million

COMPANY:Ping An Good Doctor

BUSINESS:Online health care services

AMOUNT RAISED:$1.1 billion

COMPANY:WuXi AppTec

BUSINESS:Contract research

AMOUNT RAISED:$900 million

COMPANY:WuXi Biologics

BUSINESS:Contract manufacturing

AMOUNT RAISED:$500 million

Source:

Companies, media reports

Other Chinese technology firms have listed in China and Hong Kong in recent months with comparable success. Pharma­Block, a custom maker of chemicals used in pharmaceutical research and production, saw its shares hit their maximum allowed price increase for 16 days in a row after it listed in November 2017. The surging price of the stock turned one of the company’s chauffeurs into a U.S.-dollar millionaire, CEO Haijun Dong says.

WuXi AppTec listed in China recently after delisting from the New York Stock Exchange in 2015. In a 2016 C&EN interview, founder Ge Li said he had been disappointed that U.S. stock analysts misunderstood his company’s business. Chinese investors gave WuXi the warmest welcome by oversubscribing to its IPO by almost 5,000 times.

In a recent overview of regional stock markets, KPMG predicts that technology firms from China and beyond will increasingly turn to Hong Kong for their IPOs. The auditing firm notes that the Stock Exchange of Hong Kong recently changed its rules to allow companies that are not yet profitable to list.

The Chinese drug discovery firm Ascletis, which is not profitable but has drug candidates in late stages of the regulatory approval process, recently announced it has selected Hong Kong for its upcoming IPO.

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