Hong Kong investors reap windfall from dental braces maker Angelalign as small IPOs shine in the absence of blockbuster deals

·3-min read

Small is beautiful again in Hong Kong’s initial public offerings (IPOs) as retail investors reaped a windfall from some eye-catching market returns in the absence of blockbuster tech listings. Angelalign Technology is extending that stellar run.

Shares of the Chinese maker of clear orthodontic braces soared in its trading bow on Wednesday, more than doubling the money for retail investors who turned its HK$2.91 billion (US$374 million) offering into the city’s best market debutant so far this quarter.

Angelalign closed at HK$401, a 132 per cent jump over its IPO price of HK$173. Over the course of this quarter, the stock has delivered the biggest first-day bonanza. Cancer-screening services firm New Horizon Health is the best-performing IPO this year, gaining 215 per cent in its February bow.

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Investors have focused their bets on smaller companies with niche market positions amid a sputtering IPO market in Hong Kong this quarter, with New York snaring most of the jumbo listings. Hong Kong is credited with only seven listings this quarter, versus 33 in the first three months of 2021, the fewest since 2009 according to Refinitiv.

New York has seen a bumper harvest, with year-to-date IPO proceeds of US$171 billion already surpassing the total in 2020, according to Reuters.

Since scuttling Ant Group’s IPO in November, Beijing’s tightening scrutiny on the technology sector has damped sentiment and curbed euphoria surrounding China’s Big Tech players. This has led to underwhelming profits of less than 5 per cent from JD Logistics and Trip.com’s first-day listings, the biggest IPOs this quarter.

Before Angelalign, shares of Chinese aesthetic medical firms have lured investors in both the primary and secondary market, with the industry set to benefit from rising affluence among consumers.

Shares of Sisram Medical, the Chinese maker of aesthetic treatment equipment backed by conglomerate Fosun Group, for example, have surged 361 per cent this year while EC health care advanced 110 per cent.

Angelalign attracted orders amounting to 2,079 times the number of shares on sale for retail investors in Hong Kong. That is also the second most popular after the reception to the New Horizon offering, enabling the firm to price its stock at the end of its marketing range.

“The orthodontic market may grow by 10 to 20 folds over the next decade,” said Liu Huimin, an analyst at Guoyuan Securities in Shanghai. “The key to raising its market share lies in expansion into the third- and fourth-tier cities.”

Angelalign had a 41 per cent share of the invisible orthodontic market at the end of 2020, according to its listing prospectus. Net income more than doubled from a year earlier to 150.9 million yuan (US$23.6 million) in 2020.

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