CosMX, battery supplier to Dell and HP, seeks US$490 million IPO in Shanghai as Star Market looks beyond Ant Group’s halt

Daniel Ren
·3-min read

Zhuhai CosMX Battery, a supplier of lithium ion batteries to Dell, Hewlett Packard and other global electronics companies, is seeking an initial public offering (IPO) on Shanghai’s Star Market, becoming the second manufacturer in the field to tap the bourse for capital.

CosMX plans to raise 3.25 billion yuan (US$490 million) through selling 158 million shares on the Nasdaq-like market in Shanghai at 20.56 yuan per share, or 46 times its estimated 2020 earnings, according to its prospectus.

The pending listing is a relief for investors and analysts, after Chinese regulators last week mothballed the largest IPO in global finance, stopping Ant Group’s US$35 billion dual listing in Shanghai and Hong Kong 48 hours before trading was due to commence. The plan by the battery maker – established in 2007 in the Guangdong provincial city of Zhuhai, across the river from Macau – shows that it is business as usual in the stock exchange that was created last year at the behest of the Chinese president.

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“China wants to better use the Star Market to nurture the growth of world-class technology businesses,” said Zhou Ling, a fund manager with Shanghai Shiva Investment. “A listing by a promising battery producer will cement investors’ belief that the board is home to top quality firms with potential to become global powerhouses.”

World's top 15 venues for initial public offerings, year to September 15, 2020. Source: Refinitiv
World's top 15 venues for initial public offerings, year to September 15, 2020. Source: Refinitiv

CosMX also produces batteries for cars that uses start-stop technology, which turns off the engine when the vehicle comes to a stop and restarts it once the driver releases the brake pedal.

One of the world’s top four suppliers of polymer lithium ion batteries according to Techno Systems Research, CosMX plans to use the proceeds from its IPO to finance the expansion of its production, invest in new research and development facilities, and replenish its capital.

The company’s 2019 net profit jumped 94 per cent to 432 million yuan, from a year earlier. In the first six months of 2020, CosMX said it earned 253.9 million yuan, without providing a comparative figure from last year.

The listing application, subject to a review process, has been accepted by the Shanghai Stock Exchange, although the review date is yet to be announced. China Merchants Securities is the lead manager for the stock offer, according to Bloomberg’s data.

The Star Market has grown into a financial powerhouse with 3.05 trillion yuan in capitalisation in a little more than a year since it was ordered to be established, becoming Asia’s largest fundraising avenue for start-ups.

The fundraising platform was designed to bolster China’s home-grown companies in the key technology fields such as chip, biotech, robotics and new materials at a time that Chinese companies faced the prospect of being strangled by US regulators. To date, 194 firms with an average price-to-earnings ratio of 91.5 times are traded on the board, which include China’s top chip company SMIC and CanSino Biologics, the first Chinese company to test a Covid-19 vaccine on humans.

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