By Fortune Editors and Reuters
November 8, 2017

Shares in Tencent Holdings’ (tcehy) e-book unit China Literature Ltd nearly doubled in their debut Wednesday, the biggest first-day pop for a large IPO globally this year.

The company’s stunning debut is evidence of Hong Kong raising its game as it strives to compete with the New York and Nasdaq exchanges which have been the more traditional home for Chinese tech IPOs seeking to attract international investors.

Demand for the IPO, which raised $1.1 billion, was such that retail investors bid for 625 times the shares on offer – tying up HK$521 billion ($67 billion), equivalent to a fifth of Hong Kong’s cash in circulation, as they waited to see whether their offers would be accepted.

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China Literature’s shares rose as high as HK$110 in early trade, compared to its offer price of HK$55 per share, giving it a market value of nearly $13 billion. The shares closed at HK$102.4, a gain of 86%. Before Wednesday, the best debut performance by a tech stock this year had been 44%, according to Thomson Reuters data.

“As the first Tencent-controlled subsidiary tapping capital markets, China Literature has to perform well in the secondary market to set a good example for other Tencent units,” said an institutional investor who took part in the IPO, declining to identified as he was not authorized to speak to the media.

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But while many investors cheered the stock on, others noted that the valuations for the unit were stretched.

Company executives expect net profit of 400 million yuan ($60 million) for 2017 and 1 billion yuan for 2018, according to investors who attended IPO roadshow meetings.

That implies China Literature is trading at 201 times its forecast 2017 earnings and 80 times its 2018 projections. By contrast, Tencent is trading at 51 times its 2017 forecast profits.

Co-CEO Liang Xiaodong told reporters after the opening bell ceremony that the stock’s surge was a pleasant surprise, and promised a future of acquisitions and innovation “to stay ahead of our industry.”

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China’s biggest e-book platform offers 9.6 million literary works from 6.4 million authors. Tencent began e-book publishing in 2004 and after an internal reorganization, formed China Literature in 2013.

Liang isn’t the only one pleasantly surprised. The IPO’s success burnishes Hong Kong’s once-spotty reputation as an exchange for tech stocks. It comes hard on the heels of online insurance group ZhongAn’s IPO, which raised $1.5 billion in September in Asia’s biggest-ever financial technology offering. ZhongAn shares jumped 18 percent on their debut (although they’ve given up around half of those gains since).

Meanwhile, Razer Inc, a gaming hardware maker backed by Hong Kong billionaire Li Ka-shing as well as Intel (intc), will make its Hong Kong debut next Monday. It has priced its HK$4.12 billion ($528 million) IPO near the top end of its price range, IFR reported on Tuesday.

Sogou Inc, China’s second-largest search engine and around 45 percent owned by Tencent, is due to list on Thursday in an IPO that should raise up to $585 million.

Tencent owns 62 percent of China Literature, while Carlyle Group LP holds 12.2 percent. A further 6 percent is owned by Trustbridge Partners, which was founded by Shujun Li, the former CFO of Shanda Interactive.

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