Source: Broker China Author: Yang Qingwan
Yesterday, Youbo Holdings revealed its IPO prospectus after passing the hearing. This is the first company that plans to enter the GEM market through a listing hearing after three and a half years of the Hong Kong Stock Exchange's GEM reform. Currently, there are still two companies in line to submit GEM listing applications, namely Yuansu Technology Holdings and Guangdong Jixin State Control Testing.
On January 1 of this year, Hong Kong's GEM listing reform measures officially came into effect: re-introducing a simplified transfer mechanism; eligible GEM issuers transferred to the main board without re-appointing sponsors due diligence, etc.; adding “market capitalization/revenue/R&D testing” listing standards to support high-growth companies engaged in R&D activities; shortening the locking period for controlling shareholders to 12 months after listing; and abolishing mandatory quarterly results disclosure requirements.
Rebooted after a lapse of three and a half years
Yesterday, a semiconductor company, Youbo Holdings, disclosed its prospectus after the hearing. This is the first company to pass the listing hearing after three and a half years of the GEM reform on the Hong Kong Stock Exchange GEM. The company first submitted its prospectus on April 28, 2022, and it has been updated 5 times since then.
Earlier, Hong Kong initiated the GEM reform to support the listing and financing of high-quality SMEs, so listing rules were reformed for the venture sector outside the main board. Before the reform, the last IPO company listed on the GEM of the Hong Kong Stock Exchange was Yucheng Logistics. It passed a hearing on December 23, 2020 and was listed on January 13, 2021. It has been almost three and a half years since then.
Youbo Holdings is a semiconductor industry chain company headquartered in Hong Kong. It is engaged in the manufacture of backstage semiconductor transmission media for precision manufacturing of engineering plastic castings. The main customers are IC assembly and packaging testing companies and IDM. The top five customers have had sales cooperation for more than 10 years, and the sales market covers Southeast Asia, Taiwan, mainland China, Hong Kong, etc.
Judging from the profit situation, Youbo Holdings' net profit for the past three years (adjusted) was HK$26.4 million, HK$21.8 million, and HK$5.04 million respectively. The global economy was sluggish in 2023, and the overall market size of the semiconductor industry decreased by 8.1%. Sales of the company's related products slowed down. Furthermore, the mainland China industry adopted a competitive strategy of low prices, which is relatively low compared to overseas sales prices.
Hong Kong GEM reform takes effect
On January 1 this year, Hong Kong's GEM listing reform measures officially came into effect. Currently, in addition to the fact that Youbo Holdings has passed the hearing, there are also two companies that have submitted applications for GEM listing: Yuansu Technology Holdings and Guangdong Jixin State Control Testing, which submitted applications on December 8, 2023 and March 27, 2024, respectively.
The listing rules after the GEM reform re-introduced a simplified transfer mechanism. Eligible GEM issuers transferred to the main board without the need to re-appoint sponsors due diligence, etc.; added “market capitalization/revenue/R&D testing” listing standards to support high-growth companies engaged in R&D activities; shortened the lockdown period for controlling shareholders to 12 months after listing; abolished mandatory publication of quarterly results; and other continuing responsibilities were consistent with those of main board issuers.
Previously, the reform of the Hong Kong Stock Exchange's main board listing rules has largely opened up IPO fund-raising channels for the return of Chinese securities and the listing of biotech companies and specialty technology companies. According to information, new economy companies currently account for more than one-third of the total market value of Hong Kong stocks, accounting for more than 40% of the turnover, compared to less than 20% five years ago.
However, Hong Kong's GEM reform has only begun in recent years. Compared with the multi-level capital market in mainland China, the Hong Kong stock market only distinguishes between GEM and the main board. The GEM reform once again provides GEM companies with ease of transition.
According to Wind data, since 2015, there have been a total of 206 companies listed on the GEM of the Hong Kong Stock Exchange, with an average capital raised of HK$69.78 million. Of these, there are only 3 semiconductor and semiconductor production equipment companies, and more companies come from the construction industry, travel services, durable consumer goods and clothing.
The Hong Kong stock IPO market is expected to rebound
Not long ago, the China Securities Regulatory Commission announced five policies on Hong Kong's capital market, including supporting leading companies in the mainland industry to go public in Hong Kong, broadening the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism, and helping Hong Kong consolidate and enhance its position as an international financial center. The Hong Kong stock IPO market is expected to rebound.
According to Wind statistics, only 72 IPOs were listed in the Hong Kong market in 2023, and the scale of financing hit a 10-year low. Since this year, 16 Hong Kong IPOs have gone public. Currently, 101 companies have submitted IPO applications and are awaiting listing, including Midea Group and Cao Chuxing.
Among the proposed IPOs awaiting hearing, there are also 13 companies in the pharmaceutical, biotechnology and life sciences industries, as well as 13 companies in the healthcare equipment and services industry, confirming the statement that “Hong Kong has become the largest biotech company in Asia in the city center.”
edit/lambor