China pledges to carefully vet Covid-testing companies in IPO pipeline amid concerns about earnings outlook

Name: China’s first Covid deaths in 6 months tests its coronavirus policy easing
Uploaded: 2022-11-22T10:00:14.000Z
Duration: 1 min 42 s
Description: China’s first Covid deaths in 6 months tests its coronavirus policy easing

Statement by Shanghai and Shenzhen bourses came after local media questioned lax approvals for such IPOs given limited growth prospects

At least four such companies have applied to list on the ChiNext board in Shenzhen

2-MIN READ2-MIN

People line up to take a nucleic acid test for the coronavirus disease (COVID-19) at a testing booth in Beijing on November 15. Photo: Reuters

Zhang Shidongin ShanghaiandJiaxing Liin Hong Kong

Published: 6:00pm, 22 Nov 2022

China’s two biggest stock exchanges will tighten scrutiny of listing applications by companies involved in Covid-19 testing, amid concerns among investors about their earnings sustainability following a slump in other publicly-traded peers.

The Shanghai and Shenzhen bourses will strictly vet initial public offering (IPO) plans to ensure the candidates meet the listing criteria of their respective Star Market and ChiNext board, they said in separate statements. The applicants have been asked to disclose risks, particularly the linkage between Covid-19 testing and their core business, as well as revenue sustainability, they added.

At least four companies with Covid-testing businesses are among candidates seeking to sell shares to the public in Shenzhen, according to stock exchange data. They are Xiamen Zeesan Biotech, Dakewe Biotech, RayBiotech Guangzhou and Fapon Biotech.

01:42

China’s first Covid deaths in 6 months tests its coronavirus policy easing

The statements came in response to reports in some mainland Chinese media questioning approvals for companies that thrive on the pandemic. Economists and money managers have recently speculated Beijing will start rolling back its zero-Covid policy from next year, with almost 90 per cent of the population having been vaccinated.

Beijing recently eased quarantine restrictions on arrivals and approved more international flights, while also scrapping a flight cancellation circuit-breaker. Such measures have fanned a stock rally before a popular consensus for a gradual reopening of the economy from March next year.

Shares of vaccine maker CanSino Biologics and test-kit manufacturer Andon Health, for example, have slumped in recent months as investors worried about their growth prospects. Rival Chongqing Zhifei Biological Product’s stock has fallen 23 per cent in Shenzhen so far this year.

03:28

Beijing’s central business district closes all office buildings to combat new Covid-19 outbreak

“We highly heed the applications by the companies linked to nucleic acid tests,” the bourses said in separate, identical statements late on Monday. “We will strictly review whether the business operations are sustainable, keep the gate for market entry and prudently push ahead with listings.”