Hong Kong's stock market has recently regained strength, with the Hang Seng Index surpassing the 25,000-point mark to reach a new high in over three and a half years. The IPO market also performed impressively in the first half of the year, reclaiming its position as the world's top fundraising hub, with over 100 companies queuing up for listings.
Institutional and retail investors continued to pour capital into IPOs, with more than half (54.8%) of new stocks being oversubscribed by over 100 times. Additionally, over 71% of newly listed stocks closed higher on their debut, further fueling the enthusiasm for companies seeking listings in Hong Kong.
Another big news is that recent reports suggest that mainland e-commerce giant Pinduoduo is considering a secondary listing in Hong Kong. If materialized, this would add another trillion-HKD market cap stock to the local bourse.
Pinduoduo hires Ernst & Young for audit, signaling possible listing
According to Bloomberg, Pinduoduo disclosed in regulatory filings that it has appointed Hong Kong-based Ernst & Young (EY) to audit its financial statements for this year, replacing its previous auditor, EY Hua Ming in Beijing. Citigroup analyst Alicia Yap noted that this move could indicate Pinduoduo's plans for a Hong Kong listing in the coming months, which would likely be viewed positively by investors.
Felix Wang, an analyst at Hedgeye Risk Management, pointed out that companies preparing for a Hong Kong listing typically engage local auditors to meet regulatory requirements. This pattern was previously followed by Alibaba (9988) and JD.com (9618) before their secondary listings on the Hong Kong Stock Exchange.
One of the few major US-listed Chinese firms yet to list in Hong Kong
Pinduoduo is among the handful of major US-listed Chinese companies that have not yet sought a secondary listing in Hong Kong, alongside Vipshop Holdings and TAL Education Group. In contrast, Alibaba, JD.com, and Baidu (9888) have already completed secondary listings in Hong Kong to mitigate risks of potential forced delisting from US exchanges.
A Hong Kong listing would enable Pinduoduo's American depositary receipts (ADRs) to be converted into Hong Kong shares in the event of a US delisting. Furthermore, upgrading to a primary listing status (as Alibaba did last year) would enable mainland investors to trade the stock via the Stock Connect program.
With a current market cap of approximately US$168.17 billion (HK$1.31 trillion), Pinduoduo's Hong Kong listing would introduce another heavyweight stock to the local market.
Expanding shareholder base to address investor concerns
Wang noted in a report that one major investor grievance against Pinduoduo has been its lack of interest in expanding its shareholder base through a secondary IPO. "Has Pinduoduo now changed its stance on a Hong Kong listing? This would undoubtedly improve investor sentiment," he said.
As one of China's top three e-commerce platforms, Pinduoduo's revenue in the last fiscal year (RMB 393.84 billion) lagged behind Alibaba (RMB 996.35 billion) and JD.com (RMB 1,158.8 billion). However, its net profit of RMB 122.34 billion surpassed JD.com's RMB 41.4 billion and nearly matched Alibaba's RMB 129.47 billion**demonstrating stronger profitability.
Founded in April 2015, Pinduoduo operates as a social e-commerce platform specializing in C2M group buying, where users team up with friends and family to purchase products at lower prices. The company went public on the New York Stock Exchange in July 2018.
Its cross-border platform, Temu, launched in the US in September 2022, has rapidly expanded globally. In August 2024, founder Colin Huang became China's richest person with a net worth of US$48.6 billion, surpassing Nongfu Spring's Zhong Shanshan.
(Source: Wen Wei Po; Journalists: Cai Jingwen, Sum Kin-lok; English Editor: Darius)
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