On Friday, August 5, US Eastern time, Hong Kong-funded securities firm Zhifu raised funds.$Magic Empire Global (MEGL.US) $At one point, the stock price soared by 5262.5% on the first day of trading, with the share price reaching as high as $235.95 per share during the day, and the circuit breaker was triggered several times during the day.
According to the prospectus, Zhifu raised IPO at a price of $4 a share, and the company plans to issue 5 million common shares to the public. At the close of trading on Aug. 5, Zhifu Capital closed up 2325% at $97 per share, with a market capitalization of $1.94 billion and a price-to-earnings ratio of 9583 times.
According to Wind financial terminal data, Zhifu financing IPO traded a total of 657000 shares on the first day, with a turnover rate of 2.73%. Together with the 5 million shares issued by IPO, Zhifu's total equity is only 20 million shares.
According to the prospectus, Zhifu Capital is a financial services provider based in Hong Kong, China, mainly engaged in providing corporate financing consulting and underwriting services. The company was established on May 10, 2016 and employs nine people. The company was co-founded by Chen Weihao, who used to work for CCB International, and Chen Sihan, who once worked for Guotai Junan in Hong Kong.
From its establishment in 2016 to the date of disclosure of the prospectus, Zhifu financing has completed eight IPO projects, all of which are the sole sponsors. In 2021 and 2020, Zhifu Finance participated in 6 IPO projects, 31 financial advisory and independent financial consulting projects, 24 compliance projects and 3 underwriting projects.
According to Zhifu's prospectus, the company has a diversified customer base, including online advertising, real estate development, property management services, supply chain management, manufacturing, chemicals, logistics and education.
According to the prospectus, Zhifu plans to use 50 per cent of the funds raised by IPO to strengthen its corporate financial advisory business in Hong Kong, China and expand its share of other international capital markets; about 10 per cent will be used to expand its asset management business; and about 10 per cent will be used to enhance its brand and expand office operations, while the rest of the raised funds will be used for working capital and other general corporate purposes.
According to Zhifu's prospectus, as of December 31, 2021, the company had only nine employees, including two managers, two employees responsible for finance, administration and compliance, and the remaining five project executives.
According to the prospectus, Zhifu Capital had revenues of HK $20.417 million in 2020 and HK $16.87 million in 2021, with net profits of HK $4.1996 million and HK $1.5786 million, respectively. The company's business can be broadly divided into three categories, namely, IPO sponsor business, financial advisory and independent financial advisory services, and compliance consulting services, which generated revenue of HK $6.775 million, HK $4.928 million and HK $5.17 million respectively for Zhifu Capital in 2021.
Of the 10 Chinese companies listed in the US this year, seven have experienced abnormal price fluctuations. This is particularly true at a time when market volatility and falling public valuations have led to a downturn in IPO activity.
In addition, some brokerage investment and research team pointed out that overseas IPO new shares due to the lack of historical chips, attention in the process from low to high, it is easy to cause the concentrated catalysis of market sentiment, in the context of the lack of hot spots to make money in the current market, short speculation funds focus on individual stocks, but for investors, in the context of a substantial rise in valuation in the short term, priority should be given to risk factors.