Kintor Pharmaceutical (9939), one of the hottest debutants to date this year, only rose 6 percent in the gray markets last night, sparking concerns that the biotech sector is overvalued as Covid-19 vaccine developer CanSino Biologics' (6185) stock slumped amid WuXi Biologics Cayman's (2269) share placement.
Kintor raised HK$1.75 billion by pricing its initial public offering at HK$20.15 apiece, the top of the marketed price range, after being more than 550 times oversubscribed in the retail portion. But for those retail investors who borrowed money to subscribe maximum amount available, a mere 6 percent paper gain is still not enough to cover their margin interest and transaction costs.
CanSino Biologics tumbled as much as 23 percent yesterday, erasing an earlier 16 percent surge. The stock had almost tripled since announcing on March 4 it was in the process of developing a vaccine.
"No one knows how much CanSino is worth," Castor Pang, head of research at Core Pacific-Yamaichi International Hong Kong. "People are making bets on the success of its vaccine, but the trial is just in stage two and there is a possibility for it to fail."
Meanwhile, WuXi Biologics Holdings will no longer be controlling shareholder of WuXi Biologics Cayman, after the chairman Li Ge-backed company placed 60 million shares for HK$7.63 billion yesterday. It was the seventh time since the IPO lockup period ended in mid-2018, lowering its shareholdings from more than 60 percent to 26.89 percent.
The share placements could damage investors' confidence, especially when share price rise, with the biggest shareholder being the one who knows the company's operation best, said Stanley Chik Yiu-fai, head of research at Bright Smart Securities & Commodities (1428). The motivation to share sale is difficult to predict, he said, the biotech firm may raise cash to fund research and development or prepare for potential mergers and acquisitions, it also could be due to the financial needs of top managers, Chik said.
In other IPO news, Haina Intelligent Equipment International saw HK$1.4 billion retail orders for its up to HK$174 million IPO within the first two days, reportedly attracting subscription from two top managers of Hengan International (1044).
And retail investors have placed at least HK$26.4 billion worth orders for Yeahka's flotation, making it over 160 times oversubscribed.
Mainland internet giant Baidu is weighing a secondary listing in Hong Kong as the United States plans to tighten listing rules for Chinese companies, chief executive Robin Li Yanhong said.