Doug Young

Corporate China | IPOs: Hong Kong overtakes New York with year-end IPO flurry

Upcoming Hong Kong IPOs for nuclear energy firm CGN Power and real estate developer are likely to do well, while a third listing for car maker BAIC could get a more lukewarm reception.

Reading Time:3 minutes

Why you can trust SCMP

Wang Jianlin, chairman of Chinese property developer Dalian Wanda Group, answers a question during an interview. Photo: Reuters

Doug Young

Published: 11:47am, 29 Nov 2014

New York has posted a banner year for Chinese IPOs, culminating with the record-breaking $25 billion (HK$153 billion) listing for Alibaba (NYSE: BABA) in September. But Hong Kong is showing it still has plenty to offer too, with a flurry of major new listings coming in the final month of 2015. At least three major new offerings are bubbling around the headlines as we head into December, led by one for China's largest nuclear plant builder, CGN Power Co. Meantime, Beijing-based auto maker BAIC and property giant Dalian Wanda are also revving up for what could well be two of the biggest listings for the year.

Each of these listings has a slightly different story, but observers will note that all three come from more traditional industries. By comparison, the US has proven much more fertile ground for high-growth technology companies like e-commerce giants Alibaba and JD.com (Nasdaq: JD), which made two of the biggest New York listings this year.

The trio of firms lining up for new listings in Hong Kong have also been frustrated to some extent by China's own inefficient IPO system. Wanda has said it would have preferred to make a listing in China but finally opted for Hong Kong after applying for several years without success. The same may be true for Legend Group, parent of PC giant Lenovo (0992.HK), which has been eying its own IPO in the next 12 months.

Let's start this year-end IPO round-up with CGN Power, whose offering is the most advanced as it began taking orders for shares on Thursday for an offering that could raise up to $3.1 billion. The company has set a range of HK$2.43 (31 cents) to HK$2.78 for its shares, which are slated to price on December 3 and start trading a week later.

The offer is reportedly getting a strong reception due to CGN's strong growth prospects as China searches for lower polluting energy sources to clean up its dirty air. The company should also get a first-to-market premium, providing an interesting alternative for people interested in buying into the Chinese power sector. Accordingly, I would expect the IPO to price near the top of its range and to also debut strongly.

Next in the pipeline is BAIC, which has talked for quite a while about listing its shares. The company has previously mentioned Hong Kong as a preferred listing ground, as many of its peers such as Geely (0175.HK) and Dongfeng (0489.HK) are already traded there. The latest reports say BAIC has finally received approval from Hong Kong for the listing after a five month wait, and plans to debut on December 18.