Shares of medical provider C-Mer Eye Care surge on Hong Kong trading debut
Its shares rise 76 per cent above their offer price, a sign of optimism for IPOs in the city
Hong Kong medical services company C-Mer Eye Care Holdings soared 76 per cent on its trading debut on Monday, boding well for potential initial public offerings in the city this year.
Shares in the company, which operates eye clinics, closed at HK$5.11 on Monday, compared with the IPO price of HK$2.90 and the marketed range of HK$2.35 to HK$2.90. They had opened at HK$5.35.
“There will be more companies listing in Hong Kong this year that are set at aggressive IPO prices. Even if stock valuations are expensive, investors may still push up prices on trading debuts,” said Castor Pang Wai-sun, Core Pacific-Yamaichi’s head of research.
C-Mer, which counts internet giant Tencent Holdings chairman Pony Ma and clothing retailer Esprit’s ex-chairman Michael Ying Lee-Yuen as cornerstone investors, is raising a net HK$521.3 million (US$66.6 million). The retail share offer was increased to 98.5 million shares from 19.7 million under the exchange’s clawback rule, which allows shares to be reallocated to retail investors if demand exceeds the original allocation.
The IPO was oversubscribed by more than 1,500 times, locking up about HK$89.9 billion of funds. The proceeds will go to establishing three new eye hospitals in China as well to the possible acquisition of existing eye hospitals in the country.
The surge in C-Mer’s stock came as Hong Kong’s benchmark stock index fell just short of its historical closing record price of 31,638.23 set on October 30, 2007.
Analysts said optimism over Hong Kong’s pipeline of IPOs this year followed the announcement of a plan to change listing rules to attract more companies, particularly those with dual-class share structures.
The founder of the world’s largest e-commerce shopping platform, Alibaba Group Holding, had said in the wake of the announcement that he would consider listing its shares on the local bourse. The exchange’s previous rule to bar companies with such structures was the reason Alibaba had originally rejected Hong Kong for its listing. Alibaba owns the South China Morning Post.
The changes are likely to kick in by mid 2018, attracting more well-known Chinese technology companies to list in Hong Kong, OCBC Bank said in a research note. This new wave of IPOs is likely to suck in more funds and push up Hong Kong dollar interest rates this year, it said.
Lufax, a unit of Ping An Insurance Group and China’s largest online wealth management platform, also said it was coming to the Hong Kong market for a flotation, pushing up shares in Ping An on Monday.
However, other recent new listings in Hong Kong did not fare so well on Monday. Yixin Group, an online car-loan provider backed by Tencent, tumbled 3.08 per cent to HK$6.61, and has been trading below its IPO price since November.
Computer game accessories maker Razer Inc slid 1.02 per cent to HK$3.87, slightly below its IPO price in November.
“A correction in the stocks show how expensive the IPOs were priced at compared to price-earnings ratios. The IPO pricing level depends on whether the company wants to raise as much money as it can or wants to give investors some price gains,” Pang said.