China Bohai Ends Flat in Hong Kong Debut

Raising $1.78 billion, Bohai's IPO became the largest primary share listing in the city this year, but uncertainties weighed on its performance in debut.
Anthony RussoJul 16,2020,17:10

It wasn’t an unmitigated disaster but yet an underwhelming performance for China Bohai Bank Co., Ltd. (HKEX: 09668) in its Hong Kong debut Thursday. The Tianjin-headquartered bank opened flat at HK$4.80 per share and ended its day trading at that price. The company traded as high as $HK4.82 per share and as low as HK$4.71 per share in its debut.

The pricing at HK$4.80 also came in at its low-end range of between HK$4.75 and HK$4.98 per share. According to the Nikkei Asian Review, the bottom end of the pricing was a result of the fears in the market over a second wave of Covid-19 cases in Hong Kong and elsewhere. Hong Kong Thursday reported a record high of 67 new infections, according to health authorities.

Also, Hong Kong investors weren’t too kind its main benchmark, as the Hang Seng Index dropped 2% to 24,970.69 points.

Despite that, after raising $1.78 billion in its IPO, it became the largest primary share listing in the city so far in 2020. China Bohai intends to use the proceeds from the listing to enhance its capital base.

Established in December 2005, China Bohai was set up by seven shareholders including TEDA Investment Holding and Standard Chartered Bank. According to a Reuters report last week, the IPO drops its largest shareholder TEDA to 20.85% from 25%, as well as its second-largest shareholder Standard Charted’s equity control to 16.67% from the previous 20%.

In 2019, China Bohai's net profit soared 15.7% year-over-year to 8.19 billion yuan. As of March, it maintained assets of 1.12 trillion yuan.

Another thing investors are going to want to keep an eye is China's banking watchdog’s warning over the weekend of a sharp rebound in bad loans because of the pandemic. The China Banking and Insurance Regulatory Commission noted that banks face a combined shortfall of at least 350 billion yuan ($50 billion) in bad-loan provisions to meet a minimum regulatory mandate. Banks have been encouraged to bolster profit retention to assemble capital, as well as properly cutting or limiting bonuses. 

Looking ahead, there will be a lot of uncertainties China Bohai amid the coronavirus crisis.