FAST NEWS: Black Sesame rebounds slightly after plunging on trading debut

The Latest: Shares of autonomous vehicle chipmaker Black Sesame International Holding Ltd. (2533.HK) rebounded slightly on Friday, after plunging 27% on their trading debut the previous day.

Looking Up: The company raised HK$950 million ($122 million) through the IPO, which it will use for future R&D and to enhance its commercialization capabilities.

Take Note: The local portion of the company’s public offering was only 1.5 times oversubscribed, reflecting lukewarm interest among small retail investors.

Digging Deeper: Black Sesame is one of a new generation of companies taking advantage of a recently relaxed Hong Kong Stock Exchange rule allowing “specialist technology companies” with good growth potential to list even if they have no revenue, as long as their market capitalization is HK$10 billion or larger. It is the second company to go public using the new rule after QuantumPharm (2228.HK). Black Sesame was founded in 2016 as a producer of chips for autonomous vehicles and was approved to go public this year. Its revenue exceeded 300 million yuan ($42 million) last year, but it has lost nearly 10 billion yuan in the past three years.

Market Reaction: Black Sesame’s shares rose 5.6% to HK$21.60 by the midday break on Friday. Even after the rebound, they are still 22.9% below their IPO price of HK$28.

Translation by A. Au

To subscribe to Bamboo Works weekly free newsletter, click here