FAST NEWS: Zhonggan Communication plummets in Hong Kong trading debut

The Latest: Integrated telecoms infrastructure services provider Zhonggan Communication (Group) Holdings Ltd. (2545.HK) opened at HK$0.76 in their Wednesday trading debut, 39.2% lower than their IPO price of HK$1.25, with a market capitalization of about HK$486 million ($62.3 million).

Looking Up: The local portion of the company’s public offering in Hong Kong was oversubscribed by about 196 times, which reflects good public response. The company priced its share at HK$1.25, the upper end of their IPO price range.

Take Note: The international portion of the listing was only 50% oversubscribed, which was not as favorable as the local public offering.

Digging Deeper: Established in 2002, Zhonggan was initially focused on telecom infrastructure services and started to provide smart city solution services in 2018. Over the past three years, its revenue fluctuated under the impact of the Covid pandemic, but its net profit remained stable with the contribution of better gross margin from smart city solution services. After being delisted from the National Equities Exchange and Quotations (NEEQ) board in Beijing in August 2019, the company finally returned to the capital market by listing in Hong Kong after nearly four years of preparation.

Market Reaction: Zhonggan’s shares extended their early declines on Wednesday morning, closing HK$0.72 at the midday break, down 42.4% from the IPO price.

Translation by A. Au

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