Huijing IPO turns cold amid listing frenzy

January 15, 2020 12:43
Dongguan-based property developer Huijing Holdings saw its HK$1.4 billion initial public offering attract just 32 percent subscription. Photo: Huijing

(09966.HK), which focuses on urban rendevelopment in Dongguan, recorded one of the poorest invest

They say when it rains, it pours. But some end up with just trickles. Same thing with IPOs.

Beijing-based mobile app developer NewBorn Town (09911) saw the retail tranche of its initial public offering oversubscribed 1,400 times. It was followed by Chinese restaurant chain operator Jiumaojiu International Holdings (09922.HK), which saw it offering oversubscribed 637 times.

However, mainland property developer Huijing Holdings (09966.HK), which focuses on urban redevelopment in Dongguan, recorded one of the poorest investor receptions in Hong Kong. Its HK$1.4 billion offering saw a subscription of only 32 percent.

As such, all 3,180 subscribers got their shares, along with the four major underwriters – China Galaxy International, CCB International, China Merchants International and Guotai Juanan International.

The controlling shareholder owns 85 percent of the company after the offering.

Sixteen firms jumped on the IPO bandwagon just before the Lunar New Year, ending up getting listed in the Year of Pig, a volatile year dominated by US-China trade tensions and the protest movement in Hong Kong.

With the Phase 1 trade deal between China and the United States set to be signed on Wednesday, market sentiment has turned bullish. The Hang Seng Index returned to 29,000, its level last year.

Why did Huijing fail to catch the bull run?

One reason could be that it is one of the smallest mainland property developers among the 100 that are already listed, and the common thinking is that investors will get better and safer returns if they go for industry leaders rather than laggards.

Huijing, however, is not without its bright points. For one, it's based in Dongguan, which has recorded the highest GDP growth in the Greater Bay Area. Its focus on urban renewal projects also suggests a strong outlook.

But many investors are reluctant to bite. Perhaps it's because its operating numbers are not exactly sexy. In the first half of 2019, Huijing reported an 11 percent decline in profit to 210 million yuan (US$30.45 million).

With such a poor market reception, all we can say is good luck to the four sponsors, who might soon be seen rushing to the exit.

– Contact us at [email protected]


EJ Insight writer