Chinese Companies Rush for US Listings ahead of New Rules

An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters
An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters
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Chinese Companies Rush for US Listings ahead of New Rules

An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters
An Xpeng Motors showroom at the company's headquarters in Guangzhou, China. Reuters

The number of US IPOs by Chinese firms jumped in March, as some of them rushed to set up offshore listings before rules take effect that will complicate the process, though with markets jittery, several met with a tepid response.

Seven Chinese firms including Chanson International and Hongli Group have launched public offerings in March to raise a combined $82.3 million, compared with just four in the preceding two months, Reuters reported.

Although the numbers are not huge, the surge stands out since only six mainland China-based companies launched US IPOs in 2022 as Sino-US tensions and in particular strict regulatory scrutiny on both sides hurt investor demand for such listings.

China's new rules, published in February and which take effect on March 31, are aimed at reviving the path for international offerings, which all but disappeared in the wake of regulatory crackdowns beginning in the middle of 2021.

They also impose an approval system on a once freewheeling market, with a focus on national and data security, hence the hurry from some firms to get in ahead of them.

"There is obvious acceleration in Chinese companies seeking US offerings this month, considering the uncertainty posed by the new offshore listing rules," said Stephanie Hu, head of Asia, investment banking at EF Hutton, which was a bookrunner on Chanson's listing.

The new system requires submitting materials to the China Securities Regulatory Commission (CSRC) and getting the green light from relevant government bodies.

That will "reduce regulatory uncertainty" said Mandy Zhu, head of China Global Banking at UBS, and standardize domestic firms' international listings.

It is also likely to be time consuming.

Among the new listings was bakery chain Chanson International, which debuted on the Nasdaq on Thursday.

"It is, indeed, that we don't need to get approval from associated departments of China if we get listed before March 31," chairman and CEO Gang Li told Reuters.

"But we will abide by Chinese rules and carry out all follow-up work cooperation if necessary."

The listing raised a modest $13.6 million, and fell heavily in its first day of trading and closed almost 40% below the issue price, perhaps a sign that markets roiled by banking jitters are in little mood for small Chinese listings.

Earlier in the week, steelmaker Hongli Group, food grain manufacturer YanGuFang International Group and wheelchair-maker Jin Medical International listed in the US, also receiving tepid responses from investors.

Reuters reported on Thursday that London is also courting new Chinese listings.



Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.