United Imaging shares soar 75% on Shanghai debut, China’s 3rd largest IPO in 2022

A gong is pictured ahead of the listing ceremony for the first batch of companies on STAR Market, China’s new Nasdaq-style technology advisory, at the Shanghai Stock Exchange (SSE) in Shanghai, China July 22, 2019. REUTERS/ Stringer

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SHANGHAI, Aug 22 (Reuters) – Shares of United Imaging Healthcare Co (688271.SS) jumped 75% on their Shanghai debut on Monday following a $1.6 billion initial public offering (IPO). dollars from the Chinese company, the largest in Chinese technology-focused markets. STAR Market so far this year.

The jump came after strong demand during the stock sale, China’s third-biggest IPO this year, as investors identified the diagnostic imaging device maker as a safe haven amid bleak growth prospects in the country, analysts said.

Shares of the company, the biggest domestic player in its field, opened up 55% at 170.1 yuan and by the lunch break, shares were up 66% at 182.6 yuan.

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Yang Hongxun, an analyst at investment advisory firm Shandong Shenguang, said the rise was fueled both by company fundamentals and ample market liquidity – big deals flourished in China, fundraising total surpassing the world ranks in the first half.

“The market is not short on liquidity and sentiment is improving,” Yang said.

Stepping up measures to support its slowing economy, China lowered its benchmark policy rate on Monday, following easing measures introduced last week, lifting the main benchmark (.CSI300) by 0.8%. Read more

In addition, Yang said, United Imaging “will also be a go-to for institutions” given its leadership position in its industry, “the role in China’s strategy of domestic replacement of foreign technology…and the prospect of being included in major indexes.”

United Imaging sold 100 million shares at 109.88 yuan apiece, raising 10.99 billion yuan ($1.62 billion) this month, after the offering was more than 3,500 times oversubscribed among retail investors.

NATIONAL LEADER

The medical technology company, which competes with the healthcare divisions of General Electric Co (GE.N), Siemens AG (SIEGn.DE) and Philips NV (PHG.AS), has seen demand for its devices scanning and imaging to benefit from the coronavirus outbreaks in China.

Proceeds from the public offering, China’s third-biggest IPO so far this year according to Reuters calculations, will be used to fund research and development, production and marketing, it said. it stated in the IPO prospectus.

The stock was priced at 78 times earnings from the sale, more than double the industry average multiple of 35. It will trade with no price limit in the first five sessions, while fluctuations will be capped within a 20% range thereafter.

CITIC Securities and China International Capital Corporation (CICC) were the co-sponsors of the IPO. Haitong Securities acted as joint underwriter.

National brokerages said United Imaging’s future prospects are good.

As a Chinese leader in diagnostic imaging devices, Industrial Securities said United Imaging would benefit from localization in the industry to compete with overseas peers, boosted by favorable government policies.

Meanwhile, Sinolink Securities launched its coverage of the stock with a “buy” rating and price target at 140.3 yuan, well below its Monday trading levels.

However, United Imaging warned that revenue growth for imaging devices may slow in the future, given lower demand due to advances in COVID-19 testing methods, vaccines and drugs.

The industry could also be vulnerable to possible government price restrictions under President Xi Jinping’s “common prosperity” campaign, analysts said.

“If more cities or the central government introduce a centralized procurement policy for large healthcare equipment, the company could face more pressure to lower prices,” Industrial Securities said in a note.

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Reporting by Jason Xue, Samuel Shen and Brenda Goh in Shanghai, Roxanne Liu in Beijing; Editing by Kenneth Maxwell

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