Hong Kong and Chinese Mainland IPO Markets 2014 Review and 2015 Outlook
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Hong Kong and Chinese Mainland IPO Markets 2014 Review and 2015 Outlook National Public Offering Group 31 December 2014 In 1H/2014, the following economic and political developments shaped the trends of Mainland and Hong Kong capital markets: Market’s concern over liquidity of Mainland capital market, and how downward pressure of the economy U.S. economic indicators continued and weakening property market to be positive and tapering of bond would impact income of local purchase was in line with market governments and raise risk of local expectation. But market turned defaults in China. volatile due to increasing risk of interest rate hike ahead of schedule. The Two Sessions set the priorities for 2014 and Following continued slowdown of the country would introduce more reform China’s economic statistics for measures. At the same time, the mild adjustment months, mini-stimulus and targeted in new policy for new share issuance has brought speculation over whether meetings of cuts in reserve ratio requirement Public Offering Review Committee would be re- (RRR) were introduced in Q2. adjourned, the time for re-activating IPO activities, and if the market has sufficient liquidity to support new listings. Russia might face sanctions from European Union and U.S. against its military intervention in Ukraine.Market believed that the economic sanctions would blow the Unstable situation European economy. in Iraq ©2015. For information, contact Deloitte China. 2 In 2H/2014, global economy and political situations of numerous countries impacted Mainland and HK capital markets: The People’s Bank of China’s decision to cut deposit and loan rates of financial institutions U.S.Fed announced exit of QE3, but will failed to excite economic performance.Market maintain low interest rate for a long time. anticipated full cut in RRR/ interest rate to With improvement in employment, support market liquidity and a relaxed monetary market expects interest rate to be raised policy. in Q2 of 2015. Signs of economic slowdown The State Council meetings, APEC CEO were strengthening as several Both official launch Summit, and Central Economic Work Chinese economic indicators timetable and turnover Conference set several economic weakened for months and development and reform policies, of Shanghai-HK Stock some hit new low for months. including nine areas of ‘new normal’ Connect fall short of The central government has economic growth, state-owned enterprise market expectation. stepped up its effort in reform, acceleration of new share supervising local debt issue. issuance reform to registration-based regime, raise in timely supply of new shares proposed by China Securities Performance of Eurozone economy slipped, Regulatory Commission as well as resulting in lowering of GDP forecast for 2014 ChiNext reform, etc. and 2015. The market was in a hope that economy and employment would be In the face of sanctions by Europe and U.S. stimulated by nearly 2,000 investment and plunge in oil price to five-and-a-half-year projects from European Commission. low, Ruble was hit. Russia is expected to face recession next year. ©2015. For information, contact Deloitte China. 3 Review of IPO Market in 2014- Hong Kong 4 香港及中国大陆IPO市场 -2014年上半年回顾与展望 HK’s IPO Performance in 2014 Reached Another Level No. of IPOs and funds 1raised exceeded market expectation No. of IPOs hit historical height 2 IPO proceeds climbed further to 3 close to 2009 level No. of H-share listings reached historical high Top 5 IPOs rose more than 45 30% against last year No. of jumbo IPOs and their proceeds were 6 the highest since 2011 No. of listing applications Over-subscription rates of top 5 IPO were exceeded last year 8 7 significantly higher than last year Companies from unique sectors IPOs with price-to-earning ratios continued to come to list in HK, includ10ing 9 of more than 20 times increased China’s first nuclear power company by 15 percentage points (CPN Power), Asia’s largest integrated funeral service provider (Nirvana Asia), etc. Source: Hong Kong Stock Exchange (HKEx), Deloitte analysis; excludes the transfer of listings from Growth Enterprise Board to the Main Board and proceeds do not include the green-shoe options of 10 newly-listed companies which did not announced their stabilization actions by 31 December 2014 5 ©2015. For information, contact Deloitte China. HK's IPO market performed strongly in 1H/2014 48new listings,raising HK$ 81.3 billion (↑105%) ( 1H/2013:22 new listings, raising HK$39.7billion) Proceeds were more than doubled that of the same period of 2013,showing the strongest performance in the first half year. Source: Hong Kong Stock Exchange, Deloitte Analysis; as of 30 June 2014, excludes the transfer of listings from Growth Enterprise Board to the Main Board and proceeds do not include the green-shoe options of 13 newly-listed companies which did not announced their stabilization actions by 30 June 2014 6 ©2015. For information, contact Deloitte China. HK’s IPO market showed more robust performance in 2014 over 2013 115 IPOs raising HK$227.7 billion (↑35%) (2013: 104 IPOs raising HK$168.9 billion) The funds raised over the year were close to HK$248.2 billion in 2009. Among the total funds raised, over 60% of the total proceeds raised came from IPOs in Q3 and Q4. The number of IPOs hit another historical height by breaking the record of 104 IPOs in 2013. Source: HKEx, Deloitte analysis; excludes the transfer of listings from Growth Enterprise Board to the Main Board and proceeds do not include the green-shoe options of 10 newly-listed companies which did not announced their stabilization actions by 31 December 2014 7 ©2015. For information, contact Deloitte China. Hong Kong Overview of IPO Market -2014 Proceeds from this year’s top 5 IPOs accounted for nearly 50 percent of the total proceeds raised for the year, 33% up against last year; H-share listings continued to play a key role in mega IPOs Proceeds Raised Issuer (HK$ billion) 2014 1. Dalian Wanda Commercial Properties Co., Ltd. – H-Shares 28.8 2. CGN Power Co., Ltd – H-Shares 28.2 HK Electric Investments and HK Electric Investments 3. 24.1 Limited – SS 4. WH Group Limited 18.3 5. BAIC Motor Corporation Limited – H-Shares 11.0 2013 1. China Everbright Bank Company Limited – H-Shares 24.9 2. China Cinda Asset Management Co., Ltd. – H-Shares 21.9 3. Sinopec Engineering (Group) Co., Ltd. – H-Shares 13.9 4. China Huishan Dairy Holdings Company Ltd. 11.6 5. Huishang Bank Corporation Ltd. – H-Shares 10.6 Source: HKEx, Deloitte analysis; as of 31 December 2014, proceeds do not include the green-shoe options of Dalian Wanda and BAIC Motor, in which their stabilization actions were not announced by 31 December 2014 8 ©2015. For information, contact Deloitte China. Hong Kong Overview of IPO Market -2014 H-Share offerings rose rapidly to new historical height to 21 deals, which were more than two times from 8 deals last year No. of H-Share listings 2014* (1993-2014) 25 1. Fujian Nuoqi Co., Ltd 2. Nanjing Sinolife United Company Limited 21 3. Livzon Pharmaceutical Group Inc 20 4. Poly Culture Group Corporation 20 Limited 18 5. Harbin Bank Co., Ltd. 6. China CNR Corporation Limited 7. Qingdao Port International Co., Ltd. 15 15 8. Hanhua Financial Holdings Co., Ltd 15 14 9. Dynagreen Environmental Protection Group Co., Ltd. 12 10.Central China Securities Co., Ltd. 11.China Vanke Co., Ltd 12.Chanjet Information Technology Company Limited. 10 9 13.Beijing Digital Telecom Co., Ltd. 8 8 8 14.Beijing Urban Construction Design & 7 7 Development Group Co., Limited 6 6 6 6 6 15.Shanghai La Chapelle Fashion Co., 5 Ltd. 5 16.Wuxi Sunlit Science and Technology Company Limited 22 17.Yangtze Optical Fibre and Cable Joint 1 Stock Limited Company 18.CGN Power Co., Ltd 0 19.BAIC Motor Corporation Limited 20.Dalian Wanda Commercial Properties Co., Ltd. Source: HKEx, Deloitte Analysis, as of 31December2014. 21.Shengjing Bank Co., Ltd. * In chronological order by date of listing 9 ©2015. For information, contact Deloitte China. Hong Kong Overview of IPO Market -2014 Listing applications increased from 140 in 2013 to 159 in 2014. The number was slightly more than 155 applications in 2010. Lapsed listing applications significantly dropped; Rejected, Listing applications in HKEx rose 14% this year withdrawn and returned applications jumped • 159 listing applications for the Main Board (MB) and • In 2014, 23 applications were lapsed, decreased from 34, or Growth Enterprise Market (GEM) were accepted for the full 32% y-o-y. year of 2014, rose from 140, a y-o-y increase of 14%. • 13 applications were rejected, increased from 6, or 117% y-o-y. • 38 active applications were being processed, rose from 37, • 7 applications were withdrawn, rose from 2, or 250% y-o-y. with an increase rate of 3%。 • 4 returned applications, raised from 1, or 300% y-o-y. The number of IPOs in Q4 was at a similar level as that of 2011. Although more IPOs were completed in Q3 than in Q4, proceeds in Q4 increased significantly by 96%. HK MB IPOs HK GEM IPOs Proceeds from IPOs (HK$ billion) 70 350 60 300 12 P r 50 3 250 o cee Os 40 200 d P 3 I s f ra o 8 30 5 150 5 i sed o. 47 2 49 1 N 20 2 3 5 100 37 3 5 2 0 2 2 0 2 3 23 26 4 3 24 27 27 10 0 0 0 0 21 18 1 5 18 50 13 13 14 15 12 13 16 10 11 7 7 7 10 10 10 6 0 5 0 2008 2008 2008 2008 2009 2009 2009 2009 2010 2010 2010 2010 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Source: HKEx, Deloitte analysis; proceeds do not include the green-shoe options of 10 newly-listed companies which did not announced their stabilization actions by 31 December 2014 10 ©2015.