1. Overview of Chinese companies going to the US in April

According to the statistics from uSmart Capital, a total of 8 Chinese stocks completed IPO in the US market as of April 30, 2024, and 3 new shares were listed on HKEX during that same period: Tianjin Construction and Development (2515.HK), Tea Baidao (2555.HK) and Chu Men Wen Wen (2438.HK). This brings the number of Chinese stocks listed in the US market this year to 20 (excluding SPAC), and the total IPO fundraising scale exceeding $2.7 billion, except Yamafen (Amer Sports Inc., code:AS.NYSE), while all other Chinese enterprises chose Nasdaq listing.

It is worth noting that after entering mid-late April, the listing rate of Chinese companies has been greatly improved. From April 16 to 19, 5 Chinese enterprises completed the listing on NASDAQ in just four days, becoming the largest listing of Chinese companies since 2024, with the total amount of funds raised exceeding 30 million US dollars, a promising trend. This reflects the high interest of the capital markets on Chinese companies and the considerable improvement in investor confidence compared with the first quarter.

Under change with overall market environment and macro-economic factors, Chinese companies raised about US$1.5B in the first quarter of 2024, a significant year-on-year increase of 150% in fundraising; entering April, the momentum of Chinese companies listed in the US has increased, both in terms of number of filings, the scale of fundraising and the market reaction.

2. Industry distribution of Chinese companies in the United States in April

In terms of industry distribution, most of the Chinese companies listed in the United States in April came from consumer services and industrial sectors, which have been more active in the U.S. market in terms of IPO activity. The details are shown below:

According to Deloitte's report, the industry structure of Chinese companies going public in the U.S. in the first quarter of 2024 was similar to that of the same period in 2023, with 46% of the companies coming from the technology, media and telecommunication industry, and 23% of the companies coming from the consumer industry. And the industries to which the listed companies belonged changed in April, with the number of Chinese IPOs from consumer services and industrials leading the way.

3. A key factor to promote Chinese companies' travel to the US in 2024

1. Market recognition recovery: According to Deloitte's report, the number of Chinese companies listed in the U.S. in the first quarter of 2024 was the same as last year, but the amount of financing rose sharply, from $553 million to $1.467 billion. This shows that the capital market for the Chinese stock sector recognized, especially Amalfin sports and other consumer sector companies, showing a bullish trend for China's subsequent economic growth.

2. High-tech rise: PwC believes that with the steady progress of the filing system, China's capital market has shown strong vitality, especially with key core technology of science and technology innovation enterprises have more listing opportunities. In addition, it is expected that the listing of Chinese stocks in the U.S. stock market will further pick up in 2024. This shows that Chinese companies choose to list in the U.S. because of the warming trend of the U.S. market and the support for technology and innovation companies.

3. Specialization of overseas architecture: In the process of Chinese enterprises going to the U.S. for listing, the construction of offshore structure is crucial. In addition to financing needs, Chinese companies listing in the U.S. also seek professional offshore structuring to adapt to and utilize the rules and advantages of the U.S. capital market. Professional teams have a deep understanding of Chinese law and the U.S. capital market and a wealth of practical experience, and through the construction of offshore structures, they are able to bring significant advantages to enterprises in terms of saving tax costs, building equity structures, reducing investment risks, and increasing the convenience of future financing, etc. With the aid of their process-oriented operations, the efficiency of Chinese enterprises going public in the U.S. is greatly enhanced.

From a comprehensive perspective, from 2024 to the present, the main motivation for Chinese enterprises to list in the U.S. is to solve the financing needs and seize the trend of the U.S. market rebound; at the same time, further promoting the listing of enterprises through the construction of offshore structures by professional teams adapts to the institutional needs of the filing system.

4. More Chinese companies choose to go public in the United States

As of April 30, 2024, around 60 U.S.-listed companies completed the SEC filing, and more companies are continuing to promote the process of listing in the United States. For Chinese stocks, listing in the U.S. can bring a series of positive impacts. This includes standardized market operation procedures and lower costs, while listing in the U.S. establishes an international capital operation platform for enterprises, providing a platform for subsequent mergers and acquisitions, financing, and exit. In addition, overseas listing can raise awareness, bring feedback to the main business expansion into a virtuous cycle.

However, changes in US listing regulatory policies have also brought challenges to Chinese companies going public in the US. Higher listing thresholds and compliance costs mean that companies need to comply with stricter disclosure and financial reporting requirements. Such changes may lead to a short-term stagnations in the pace of companies going public in the US. Therefore, professional counseling organizations that address the relevant requirements are increasingly important in the listing process.

According to uSmart Capital, US stocks have advantages in terms of liquidity and listing valuation, which will continue to support Chinese companies choosing to go to the US. In addition, U.S. stocks are more relaxed in terms of refinancing, as long as the listed company is recognized by the market, there will be opportunities and space for financing, and the scale and frequency of financing are basically not restricted. In terms of PE Ratio, the average P/E ratio of NASDAQ high-tech stocks is about 30~40 times, while the average P/E ratio of HKEX and SGX is about 8~10 times. For high-quality and high-growth companies, it is easier to gain market capitalization growth space by listing in the US.

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