After a rough initial public offering that was postponed by concerns about new US restrictions, Chinese artificial intelligence behemoth SenseTime Group Inc. soared on its first day of trading in Hong Kong.
In the city’s final big bounce of the year, SenseTime Group (0020.HK) stocks soared as much as 23 percent from their IPO price when they made its debut on the Hong Kong Stock Exchange on Thursday.
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SenseTime has a market valuation of around $18 billion thanks to its share price of 4.29 Hong Kong dollars, or 55 US cents. The Chinese AI tech company reached $740 million in its IPO, with stocks valued at HK$3.85 ($0.4937) each, well below the expected range.
SenseTime’s market capitalization was valued at $16.4 billion after profits of $3.8 billion in the first trading round. In a wider market (.HSI) that was up just 0.19 percent, the stock hit a high of HK$4.74.
During the first half of this year, SenseTime’s income grew to 1.65 billion yuan (about $260 million) from 861.2 million yuan the previous year, but the firm is still incurring losses. It suffered net losses of 3.7 billion yuan in the first half of this year and 12.2 billion yuan for the entire previous year, owing primarily to research and development costs.
Just after Tencent Holdings (0070.HK), 177.4 million SenseTime shares worth HK$759 million were traded the same day, rendering it the second most actively traded stock in aspects of revenue and valuation.
Due to Chinese legislators’ regulatory attack on a number of industries, Hong Kong has found it difficult to recruit high-priced deals this year.
On its way to Hong Kong, SenseTime overcame a stumbling block. In its initial public offering, SenseTime sold 1.5 billion shares. It put its first attempt on hold on December 13 after being placed on the US blacklist just as the deal’s institutional bookbuild was coming to an end.
United States Treasury added SenseTime to a category of Chinese military-industrial complex companies on December 10, accusing it of establishing a face detection initiative to evaluate the identity, with a focus on cultural Uyghurs.
More than a million people, mostly Uyghurs and representatives of other Muslim minorities, have been held in custody in a huge system of encampments in China’s far-western region of Xinjiang in recent years, according to UN experts and rights groups.
While SenseTime has stated that its inclusion on the blacklist has had no impact on its business operations, the ban prevented American investors from participating in the IPO.
On December 20, SenseTime re-launched the deal, this time with a larger cornerstone shareholder stake.
The IPO’s fundamental stockholders, all Chinese organizations, bought approximately 67 percent of the stock on the deal, rising from the 58 percent stake noted in the company’s initial offering.
According to SenseTime’s disclosure document, 85.4 percent of SenseTime’s profits come from mainland China in the first half of this year, 12.4 percent from Northeast Asia, which includes Japan, and 1.2 percent from Southeast Asia.