Chinese TMT IPO review and outlook (2019 H2)

Review of Chinese TMT IPO in 2019 H2

trends

Trends

The launch of the STAR market promoted IPOs in the A-share market during this period. The number of Chinese TMT IPOs increased significantly with 74 listings. Total proceeds of IPOs soared to about RMB 155.3 billion.

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Amount

The STAR market has become the main listing option for Mainland Chinese TMT companies. 38% of Chinese TMT companies chose to list on the STAR market; 31% chose to list in Hong Kong and overseas; 4% was listed on the Main Board, while 22% on Shenzhen’s ChiNext and 5% on Shenzhen SME Board.

proceeds

Total proceeds

The 23 new listings in Hong Kong and overseas raised RMB 107 billion, accounting 69% of the total proceeds. 28 enterprises raised approximately RMB 34.9 billion in financing under the STAR market. Shenzhen’s ChiNext raised about RMB 8.1 billion (5%); the Main Board and Shenzhen’s SME Board collected RMB 2.2 billion (1%) and RMB 3.1 billion (2%) respectively.

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Price-to-earnings

Average price-to-earnings ratio of A-share listed TMT companies maintained an upward trend in 2019. As of 31 December 2018, the average price-to-earnings ratio of A-share TMT companies was 33 and by 31 December 2019, the average price-to-earnings ratio was 48. In comparison, the average price-earnings ratio of the 28 TMT enterprises which listed on the STAR market in the second half of 2019 was 112 times on the first day of listing, with the average price-earnings ratio reaching nearly 272 times.


Outlook of Chinese TMT IPO

Under the new normal of strict supervision of the domestic financial market, the approval rate in 2019 increased significantly compared to the whole of 2018. Among them, the approval rating for the STAR market reached 97%, which is also a success indicator of the STAR market as a main platform that promotes the development of other sectors in the domestic financial market. For the first time, the STAR market allows science and technology innovation enterprises, that are at a loss, to go public, and allows the direct listing of red chips and other inclusive listing policies, which are very attractive to TMT enterprises.

The STAR market has created an attractive listing and financing platform for TMT companies. In the long run, we believe the sectors which will continue to attract investor attention includes semiconductor, artificial intelligence, 5G network and industry 4.0 concept companies.

The recent outbreak of the novel coronavirus pneumonia has affected China's economic activity, yet many TMT companies will likely pursue plans to expand. For example, the biotechnology industry has become a new focus of the market.

Contact us

Wilson Chow

Wilson Chow

Global Technology, Media and Telecommunications Industry Leader, PwC China

Tel: +[86] (755) 8261 8886

Jianbin Gao

Jianbin Gao

China TMT Leader and Private Equity Group Central China Leader, PwC China

Tel: +[86] (21) 2323 3362

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