Performance of China’s TMT Industry IPOs Remain Active in first half of 2022

Chinese Concept Stocks Continue to Bounce Back

Shenzhen, 18 August 2022 – PwC today released data on initial public offerings (IPOs) of Chinese Technology, Media and Telecommunications (TMT) companies in the first half of 2022. Over the first half of the year, there were 68 IPOs by Mainland TMT enterprises, a slight decline from the 74 recorded during the second half of 2021. The total amount of financing increased to RMB 160.4 billion. China Mobile Limited’s domestic listing on the main board was the single largest TMT industry IPO for the first half of the year in Mainland China, which raised approximately RMB 52 billion.

Jianbin Gao, PwC Mainland China TMT Industry Leader, said, “Driven by the domestic STAR and ChiNext markets, Chinese TMT enterprises remained relatively active in the capital market in the first half of 2022.”

Over the period, the domestic capital market remained the preferred option for Mainland TMT IPOs. Of the Mainland TMT enterprises that listed domestically, 30 representing 44% of the overall number opted for the STAR Market and 19 enterprises, accounting for 28%, listed on the ChiNext Market in Shenzhen. Financing raised by the 30 enterprises listing on the STAR Market raised a total amount of roughly RMB 70.9 billion, making up 44% of the total raised, while the financing amount of the 19 IPOs on the ChiNext Market in Shenzhen accrued an estimated RMB 27.8 billion, accounting for 17% of all financing. Another 6 Mainland TMT enterprises or 9% chose to list on the Beijing Stock Exchange, which received about RMB 1.1 billion, accounting for 1% of the total financing. An additional 4 entities, equating to 6% listed on the main board. Altogether, they garnered about RMB 55.9 billion in financing, accounting for 35% of the total. A further 9 enterprises or 13% chose to list in Hong Kong and overseas. They received around RMB 4.7 billion in financing, accounting for 3% of the total financing raised.

In the first half of 2022, there were 41 IPOs in the technology hardware and equipment industry, accounting for 60% of all TMT IPOs. The software and service industry saw 26 listings, equating to 39%, and the media industry had 1 listing, making up 1%.

Over the first half of the year, with the exceptions of China Mobile (listing on the main board) and KE Holdings (secondary listing in Hong Kong), revenue of NIO Motor and Huitongda Network that listed in Hong Kong were significantly higher than other enterprises that listed during the same period. This led to an increase in the average revenue recorded by enterprises listing in Hong Kong and overseas.

For TMT companies other than those listed on the STAR Market, the average price-earnings (P/E) ratio of A-share listed enterprises declined at the end of June 2022, compared with the previous period. The average P/E ratio of A-share TMT companies decreased from 41 times (as of December 31, 2021) to 33 times (as of June 30, 2022) but remains at a high level.

As of 30 June 2022, among the enterprises listed on the STAR Market, 167 TMT companies had a total financing amount of RMB 296.5 billion, an average financing amount of RMB 1.776 billion, and an average initial P/E ratio of 85 times.

Since the listing of the first batch of companies under the ChiNext registration system on 24 August 2020, a total of 330 companies have been listed on ChiNext, with a total financing amount of RMB 300.7 billion and an average financing amount of RMB 911 million. The average initial P/E ratio was 35 times. Altogether, 69 TMT companies account for a total financing amount of RMB 63 billion, an average financing amount of RMB 910 million, and an average initial P/E ratio of 42 times.

Jianbin Gao commented, “The implementation of the State Council’s 33 stabilisation policies will further boost the recovery of the Chinese economy as well as the capital market in the second half of 2022. Domestic TMT enterprises should still prefer Mainland China and Hong Kong for primary listing.” 

Wilson Chow, PwC Global TMT Industry Leader, said, “In the first half of 2022, China Mobile’s return to A-shares, and Alibaba seeking primary listing in Hong Kong, paved the way for Chinese Concept Stocks listing in Hong Kong, and act as positive new signals for Chinese Concept Stock enterprises. In the second half of 2022, the return of technologically innovative TMT companies and Chinese concept stocks will continue to be the main driving force for the domestic capital market. With the support of a number of policies to stimulate economic growth, as well as the improvement of the registration system, the domestic capital market is expected to continue to grow despite pressure to become a highlight in the global market.” 

 

Download the report (Simplified Chinese only): https://www.pwccn.com/zh/industries/telecommunications-media-and-technology/publications/tmt-ipo-review-outlook-2022-h1.html

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