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SenseTime surges 23 per cent in surprise Hong Kong debut with US$851 million IPO marred by US sanctions
The SenseTime logo seen outside its Shanghai office on December 13, 2021. Photo: Reuters
SenseTime, China’s artificial intelligence champion, jumped more than expected on its Hong Kong trading debut, paying off investors who shrugged off concerns about the US sanction and the regulatory crackdown.
The stock jumped as much as 23 per cent to HK$4.74 from its initial public offering (IPO) price of HK$3.85. That compared with a range of HK$3.83 to HK$3.90 quoted in grey-market trading on late Wednesday. It recently traded at HK$4.45 as of 10.03am local time.
Controversy has dogged the group’s listing plan for more than a year amid heightened geopolitical risks, prompting it to downsize the IPO from as big as US$2 billion, according to reports. The US blacklisted SenseTime in early December for alleged human rights abuses in the far-west Xinjiang region, forcing a relaunch with an amended prospectus and the exclusion of US investors.
The company has rejected those allegations as unfounded, describing the US move as a fundamental misperception.
US blacklists 28 Chinese entities over Xinjiang
The US Commerce Department had placed SenseTime on its Entity List in 2019 alongside more than 20 other Chinese firms because of its alleged role in Xinjiang. SenseTime has denied the allegations. Companies on the blacklist are prohibited from doing business with American companies without a licence
SenseTime raised HK$6.64 billion (US$851 million) by selling 1.725 billion shares, including an overallotment option, in its delayed IPO. Investors submitted bids for 5.2 times the 150 million shares in the retail portion. The allocation for global investors was upsized by 225 million to 1.575 billion shares.
The IPO proceeds are about one-seventh of those collected in the Kuaishou Technology IPO in February, the biggest IPO in the city this year. Hong Kong slipped to fourth in the global IPO league table in 2021 as a crackdown on the Chinese technology sector hurt sentiment and wiped out billions of market value, according to KPMG.
SenseTime has an 11 per cent share in the computer vision software market in China, making it the largest player in the industry, according to its IPO prospectus. The market size is expected to reach 101.7 billion yuan (US$16 billion) in 2025 from 16.7 billion yuan, or about 44 per cent annually, it said.
As an industry leader, “it is easier for SenseTime to win recognition from customers and achieve higher-than-average revenue growth,” said Jiao Juan, an analyst at Essence Securities. The brokerage expects the group to remain unprofitable until 2023.
Despite the expected poor debut, the listing will put a market value to the shares held by its co-founder Tang Xiao’ou. The 53-year old university professor holds a 20.8 per cent stake worth HK$26.6 billion. Tang is credited with US$3.4 billion in net worth, according to Bloomberg data.
Elsewhere another two companies also started trading in the city. Chervon Holdings jumped 17 per cent above its IPO price to HK$51.20, while Sirnaomics was unchanged at HK$65.90.
www.scmp.com
Hong Kong stocks advance as tech rebounds from record-low while SenseTime’s debut surpasses expectations
www.scmp.com
- The US$851 million global offering was delayed by the US decision to sanction the AI group for alleged human rights abuses
- Stock surge to as high as HK$4.74, versusthe indicative price range of HK$3.83 to HK$3.90 in grey-market trading
The SenseTime logo seen outside its Shanghai office on December 13, 2021. Photo: Reuters
SenseTime, China’s artificial intelligence champion, jumped more than expected on its Hong Kong trading debut, paying off investors who shrugged off concerns about the US sanction and the regulatory crackdown.
The stock jumped as much as 23 per cent to HK$4.74 from its initial public offering (IPO) price of HK$3.85. That compared with a range of HK$3.83 to HK$3.90 quoted in grey-market trading on late Wednesday. It recently traded at HK$4.45 as of 10.03am local time.
Controversy has dogged the group’s listing plan for more than a year amid heightened geopolitical risks, prompting it to downsize the IPO from as big as US$2 billion, according to reports. The US blacklisted SenseTime in early December for alleged human rights abuses in the far-west Xinjiang region, forcing a relaunch with an amended prospectus and the exclusion of US investors.
The company has rejected those allegations as unfounded, describing the US move as a fundamental misperception.
US blacklists 28 Chinese entities over Xinjiang
The US Commerce Department had placed SenseTime on its Entity List in 2019 alongside more than 20 other Chinese firms because of its alleged role in Xinjiang. SenseTime has denied the allegations. Companies on the blacklist are prohibited from doing business with American companies without a licence
SenseTime raised HK$6.64 billion (US$851 million) by selling 1.725 billion shares, including an overallotment option, in its delayed IPO. Investors submitted bids for 5.2 times the 150 million shares in the retail portion. The allocation for global investors was upsized by 225 million to 1.575 billion shares.
The IPO proceeds are about one-seventh of those collected in the Kuaishou Technology IPO in February, the biggest IPO in the city this year. Hong Kong slipped to fourth in the global IPO league table in 2021 as a crackdown on the Chinese technology sector hurt sentiment and wiped out billions of market value, according to KPMG.
SenseTime has an 11 per cent share in the computer vision software market in China, making it the largest player in the industry, according to its IPO prospectus. The market size is expected to reach 101.7 billion yuan (US$16 billion) in 2025 from 16.7 billion yuan, or about 44 per cent annually, it said.
As an industry leader, “it is easier for SenseTime to win recognition from customers and achieve higher-than-average revenue growth,” said Jiao Juan, an analyst at Essence Securities. The brokerage expects the group to remain unprofitable until 2023.
Despite the expected poor debut, the listing will put a market value to the shares held by its co-founder Tang Xiao’ou. The 53-year old university professor holds a 20.8 per cent stake worth HK$26.6 billion. Tang is credited with US$3.4 billion in net worth, according to Bloomberg data.
Elsewhere another two companies also started trading in the city. Chervon Holdings jumped 17 per cent above its IPO price to HK$51.20, while Sirnaomics was unchanged at HK$65.90.
SenseTime logs surprise gain in Hong Kong as market defied US sanctions
SenseTime, China’s AI champion, jumped as much as 23 per cent, paying off for investors who bet on its IPO despite ongoing pressure from US sanctions. The stock ended the day with a 7.3 per cent gain.
www.scmp.com
- Tech benchmark recovers from an all-time low as NetEase, JD.com and Tencent advance
- SenseTime beats market expectations as the Chinese AI champion rallies on its trading debut after a sanctions-marred IPO in Hong Kong
Hang Seng gains as tech stocks rebound while SenseTime surprises on debut
Investors enjoyed a positive end on the penultimate day of trading as s tech stocks climbed from a record low. SenseTime rallied on its market debut with investors shrugging off concerns about US sanctions.
www.scmp.com
