Hong Kong IPOs: Cainiao, Midea, JD Industrials, SF Holding and Movoi hotly anticipated by the market

More than 90 companies have filed listing applications with the Hong Kong stock exchange
Some 65 IPOs are set to raise about HK$45.8 billion (US$5.9 billion) billion) this year, the least in two decades, according to Deloitte

IPO

Mia Castagnone

Published: 10:00am, 25 Dec 2023

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There are more than 90 initial public offering (IPO) applications in the pipeline in Hong Kong, but the city needs more than a few blockbusters to hit the market, if there is going to be any improvement in 2024.

The city’s new IPO market this year has been one of the bleakest in two decades. A total of 42 companies raised US$3.13 billion on the main board of the Hong Kong stock exchange in the first nine months, according to financial data provider Refinitiv.

The fourth quarter has not been much different either. The IPO tally is set to shrink by more than a fifth this year, with some 65 IPOs set to raise about HK$45.8 billion, according to a report by Deloitte. Last year, 84 new listings raised HK$99.6 billion.

“The market needs more good news,” said Gary Ng, a senior economist for Asia-Pacific at Natixis. “Any successful IPOs with reasonable valuation will serve as an anchor to stabilise sentiment.”

If these deals fail, investors will continue to perceive Hong Kong as a risky market, he added.

Brock Silvers, managing director at Kaiyuan Capital, said the market’s hopes were pinned on next year’s IPO pipeline. “Otherwise, sentiment could further worsen in the new year,” he said.

Hong Kong is increasingly a Chinese market, and China remains adrift without workable insolvency plans for developers or local governments, Brock said, adding that with growing geopolitical risks, this was a real drag for the city’s capital market.

Here are six highly anticipated IPOs that could launch in 2024:

Cainiao

Cainiao Smart Logistics Network is one of the most anticipated IPOs and is widely expected to raise at least US$1 billion.

It will be the first Alibaba Group Holding company to be spun off via a listing. After the proposed spin-off, the mainland Chinese e-commerce giant will continue to hold more than 50 per cent of Cainiao, retaining it as a subsidiary.

Alibaba, the Post’s owner, had initially intended to spin off all six of its subsidiaries. But in November it scrapped plans to list cloud unit AliCloud, citing uncertainties caused by US curbs on advanced chip exports to China. The tech major also put the listing of its grocery unit Freshippo on the back burner amid weak market sentiment.

The change of plans has heightened the market’s anticipation for Cainiao’s IPO. The last time the city saw a billion-dollar IPO was China Tourism Group Duty Free’s US$2.3 billion deal in August 2022.

Midea is the world’s biggest home appliances maker. Photo: Iris Ouyang

Midea Group

The world’s biggest home appliances maker is aiming to raise more than US$1 billion, subject to market conditions, according to sources familiar with the deal.

The company’s listing application was filed in October, but details about the number of shares and expected proceeds have yet to be revealed. The company has 18 months to list from the time of shareholders’ approval.

Traders are hoping successful IPOs of Cainiao and Midea inject some life back into Hong Kong’s moribund listing environment, which has been battered by rising interest rates, China’s uncertain macroeconomic outlook and a slump in the benchmark Hang Seng Index.

JD.com could list its property and industrial units next year. Photo: Shutterstock

JD Industrials + JD Property

Shortly after Alibaba announced the spin off of its units, Chinese e-commerce rival JD.com announced a spin off its property and industrial units. JD.com is also likely to keep control of its subsidiaries.

Since the company filed the listing prospectuses of JD Industrials and JD Property in March, no other details have been released. The IPOs could also raise as much as US$1 billion each, depending on market conditions.

JD.com has previously undertaken efforts to streamline operations. It listed its healthcare arm JD Health in December 2020 followed by its logistics unit JD Logistics in May 2021.

SF Holding

Shenzhen-listed SF Holding, the parent of SF Express, could raise up to US$3.3 billion in Hong Kong.

While that plan was announced in early August, the proposal has been put on the back burner amid a slump in Hong Kong’s stock market.

One of the few details to emerge since then has been the appointment of China International Capital Corporation and UBS as overall coordinators and financial advisers for the proposed IPO.

Mobvoi

There are signs Beijing-based artificial intelligence (AI) company is moving ahead with its planned IPO. After its application lapsed this month, Mobvoi resubmitted it to the exchange.

The company, which debuted its own AI large language model in April, had planned to raise US$200 million to US$300 million from its IPO in May, according to media reports. Its software is used a variety of sectors including finance, telecommunications and senior care.

In 2017, Mobvoi attracted Volkswagen as an investor via a funding round. It also counts Sequoia Capital and Zhenfund as early backers. Google, Goertek and SIG Asia are also its shareholders.

CICC and CMB International Capital are the deal’s joint sponsors.

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