Retail investors are recommended to subscribe to no more than five board lots of Contemporary Amperex Technology's new shares, as the rise on the debut day is expected to be mild.
Battery maker CATL, which seeks to set its offer price at no higher than HK$263 per share to raise about HK$31 billion, was asking for a minimum investment of HK$26,565 per board lot of 100 pieces.
The battery manufacturer is expected to debut on May 20.
While the company is a high-quality investment target, the top range of the offer price is not attractive, as it represents only a 1.6 percent discount compared with the A-share closing price last Friday, said Kenny Ng Lai-yin, securities strategist at Everbright Securities International.
The discount is far less than market estimates of about 5 percent.
On the other hand, Ng sees a lower possibility of CATL jumping on its debut day as several Chinese food and beverage stocks did recently, citing the battery maker’s mega 1.09 trillion yuan market capitalization.
He projects CATL’s Hong Kong-traded shares to rise no more than 5 percent on its debut.
Thus, Ng suggests investors book five board lots or fewer if CATL prices the new shares at the top end of the range.
Fosun Wealth investment manager Andrew Li Xiaochong made a similar forecast, seeing a mild rise in share price on the first trading day.
Li expects CATL’s H-shares to catch up with the price of A-shares but will not exceed them, if the Shenzhen-listed shares continue to climb before Tuesday next week.
If investors have no idea what to buy, Li said he thinks it is viable for them to make margin financing to secure at least one board lot.
CATL’s A-shares gained 3.5 percent to 257.00 yuan (HK$276.67) apiece at one point on Monday trading in Shenzhen.
CATL plans to use 90 percent of the net proceeds for its new battery plant in Hungary.
Some 23 cornerstone investors including Sinopec (Hong Kong) and Kuwait Investment Authority have subscribed to 65.7 percent of the new shares offered by CATL, according to the prospectus.
CATL recorded HK$17.4 billion worth of margin financing on the first day of retail bookbuilding, marking an oversubscription of 5.6 times.
If the company later adjusts its new share issuance size and allocation, the total fundraising amount could increase to HK$41 billion, becoming the city’s largest IPO since early 2021, while already being on track to becoming the largest listing in the world so far this year.
THEMIS QI
