The latest: Meihao Medical Group Co. Ltd. (1947.HK), a private dental clinic operator, made its Wednesday trading debut in Hong Kong by opening 9.5% below its IPO price of HK$0.84.

Looking up: The local portion of the offering was subscribed by 15,241 investors for a total of 620 million shares, representing an oversubscription rate of 40.3 times.

Take Note: Despite the positive interest from local investors, the company still priced at the lower end of its IPO price range of HK$0.84 to HK$1, raising just HK$74.9 million ($9.6 million).

Digging Deeper: Headquartered in Wenzhou, an affluent coastal city of East China’s Zhejiang province, Meihao Medical is a privately owned dental clinic group established in 2011, with a market share of about 25.2% in its home region. The company first applied to list in Hong Kong as early as February 2020, but had to reapply several times before succeeding on its seventh try. Its IPO valuation of approximately HK$504 million is about half of our previous estimate of HK$1 billion, giving it a price-to-sales (P/S) ratio of 4.5 times, far lower than its much larger Shanghai-listed counterpart Topchoice Medical’s (600763.SH)’s times.

Market Reaction: Meilho Medical’s shares plunged as much as 17.9% during the Friday morning session, but later pared the losses and closed down a more modest 7.1% at HK$0.78 by the midday break.

Translation by Jony Ho

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