Dongshan raises US$1.3bn in Hong Kong's biggest listing in two months
Suzhou Dongshan Precision Manufacturing Co raised about HK$9.9 billion (US$1.3 billion) in Hong Kong's largest listing in nearly two months, pricing its shares at HK$86.80 apiece against a maximum of HK$93.80, the printed circuit board maker said in a filing to the city's stock exchange.
The deal, which sold about 113.8 million shares after Dongshan declined an option to upsize, arrives as a deepening selloff in Chinese technology stocks weighs on the region's listings pipeline. The world's second-largest equities market has lost US$3.5 trillion in value from a May peak, and the rout pushed the onshore CSI 300 Index into a bear market last week, according to Token Times. Dongshan's Shenzhen-listed stock is up 35% this year, but has fallen nearly 60% from its June peak.
"With Dongshan's Shenzhen share price declining substantially, the reference valuation for its Hong Kong offering has also fallen," said Francis Tan, Asia chief strategist at Indosuez Wealth Management in Singapore. "Investors still want exposure to the AI revolution, but they are increasingly demanding earnings visibility rather than simply buying the narrative."
The Suzhou-based company makes PCBs and optical transceivers used in AI servers and is the third-largest PCB supplier in a US$85.2 billion global market, according to its prospectus. Cornerstone investors, who receive guaranteed allocations in exchange for holding the stock for at least six months, agreed to buy half the offering; they include JPMorgan Asset Management, Alibaba Group Holding, CPE and Montage Technology, with Jane Street Group and Jump Trading also participating.
Hong Kong first-time listings have raised more than US$50 billion this year, closing in on the US$57.8 billion record set in 2010, but rising bond yields and weak deal performance are making issuers and investors more cautious, with a string of withdrawals and delays including by major regional data centre operators. Trading in Dongshan's shares is expected to begin on October 28, with UBS Group, Guotai Haitong Securities, GF Securities and Citic Securities as joint sponsors.
