United Imaging Healthcare Co’s shares surged as much as 75% in their Shanghai debut on Monday following the Chinese firm’s $1.6 billion initial public offering (IPO), the biggest on China’s tech-focused STAR Market so far this year.
The diagnostic imaging device manufacturer opened 55% higher at 170.1 yuan, after it sold 100 million shares at 109.88 yuan apiece, raising 10.99 billion yuan ($1.62 billion) earlier this month. At 0212 GMT the shares were up 68% at 185 yuan.
The surge came after strong demand from investors during the share sale – tranches reserved for retail investors were oversubscribed by a factor of more than 3,500.
The stock will trade with no price limit in the first five sessions, while fluctuations will be capped within a range of 20% thereafter.
The medical technology company, which competes with healthcare divisions of General Electric Co, Siemens AG and Philips NV, has seen demand for its scanning and imaging devices benefited from coronavirus outbreaks in China.
Proceeds from the public offering will be used to fund research and development, production and marketing, it said in the IPO prospectus.
The stock was priced at 78 times earnings in the sale, more than double the industry’s average multiple of 35.
CITIC Securities and China International Capital Corporation (CICC) were joint sponsors for the IPO, and bookrunners with Haitong Securities.
Domestic brokerages said prospects for United Imaging going forward were good.
As China’s homegrown leader in diagnostic imaging devices, Industrial Securities said United Imaging would benefit from localisation in the sector to compete with overseas peers, boosted by favourable government policies.
Meanwhile Sinolink Securities initiated its coverage of the stock with a ‘buy’ rating and a price target at 140.3 yuan, well below its Monday trading levels.
Reuters