Hong Kong's Black Sesame Intelligent Technology Debut: A Challenging Start
Black Sesame Intelligent Technology Limited, a company focused on self-driving chip technology, made its debut on the Hong Kong Stock Exchange on August 8, 2024, under the stock code 02533.HK. Despite being the second unprofitable tech firm to go public, Black Sesame Intelligent had a disappointing first day as its opening stock price plummeted by 33% below its offering price. Although there was a slight recovery in the afternoon, it still ended the day with a 26.96% decline.
During the pre-IPO grey market trading, the company's stock price already showed a downward trend, with a drop of 16% to 19%. During the public offering phase, only 1.52 times oversubscription was recorded for the company's shares, which were priced at the lower end of the offering price range at HK$28 per share. In this IPO, Black Sesame Intelligent issued a total of 37 million shares, raising approximately HK$1.04 billion.
The performance of Black Sesame Intelligent starkly contrasts with the first 18C stock, Crystal Technology, which surged by 10% on its debut. Despite high expectations from the market, its first-day performance reflects investors' concerns about its future profitability.
Key Takeaways
- Black Sesame Intelligent becomes the second unprofitable tech firm to go public in Hong Kong.
- The stock price on the debut day dropped by 26.96% below the offering price, indicating a poor performance.
- The grey market trading saw a 16% to 19% decline in the stock price.
- The public offering was only 1.52 times oversubscribed and was priced at the lower end of the offering price range.
- The IPO raised approximately HK$1.04 billion.
Analysis
Black Sesame Intelligent Technology's lackluster debut is primarily attributed to market doubts about its profit prospects. The short-term impacts include diminished investor confidence and sustained pressure on share prices, while in the long term, it could potentially affect its financing capabilities and research and development investments. Hong Kong's acceptance of unprofitable tech companies is still on the rise, and this performance may influence the IPO strategies and valuation expectations of similar companies in the future. Furthermore, the stark contrast between Crystal Technology's successful debut and Black Sesame's underperformance highlights the market's differentiated response to tech companies' profit models.
Did You Know?
- Grey Market Trading
- Explanation: Grey market trading refers to stock trading conducted in non-public markets before the official stock exchange opening. This type of trading generally takes place within brokerage internal systems, is not publicly accessible, and is primarily participated in by institutional investors or large stakeholders. The transaction price and volume of grey market trading can serve as a reference for the market's outlook on a new stock's debut performance.
- 18C Stock
- Explanation: 18C stock usually refers to newly listed stocks that meet specific conditions, which may include particular financial standards, industry classifications, or other listing requirements. In different markets, the specific definition and conditions for 18C stocks may vary. Here, 18C stocks may denote a special classification or standard for tech companies listed on the Hong Kong Stock Exchange.
- Oversubscription Ratio
- Explanation: The oversubscription ratio refers to the multiple by which investors' subscribed quantities exceed the issuance quantity during a new stock offering. For instance, if a new stock has an issuance of 1 million shares, and investors collectively subscribe to 1.52 million shares, the oversubscription ratio would be 1.52 times. This ratio usually reflects the market's interest and demand for the new stock, with a higher ratio indicating greater market anticipation for the stock.