Shanghai Stock Exchange to Investigate Zhejiang King Co Ltd After IPO Halt
Introduction: The Shanghai Stock Exchange has announced that it will be conducting an investigation into Zhejiang King Co Ltd following the suspension of its initial public offering (IPO). This move comes in response to media reports suggesting alleged issues such as the overpricing of shares. China’s securities regulators have been tightening their scrutiny of IPOs and slowing down the pace of share sales as part of efforts to revive the sluggish stock market. Zhejiang King decided to halt the new share subscription procedure scheduled for Monday due to these media reports, without providing specific details.
Increased Scrutiny on IPOs
China’s securities regulators have recently intensified their focus on initial public offerings (IPOs) and have implemented stricter measures to ensure market integrity. As part of these efforts, the Shanghai Stock Exchange has decided to probe Zhejiang King Co Ltd, a Chinese air conditioner manufacturer, following the suspension of its IPO. The media reports surrounding the IPO raised concerns about issues such as overpricing of shares, prompting the exchange to take action.
Zhejiang King’s IPO Suspension
Zhejiang King made the decision to suspend its new share subscription procedure, which was initially scheduled for Monday. The company cited media reports as the reason behind this move, without disclosing the specifics of these reports. The Shanghai Stock Exchange, in response to media inquiries, acknowledged the allegations made against Zhejiang King and announced its intention to launch a targeted investigation into the company.
Assets Acquisition and Overpricing Claims
In its prospectus released last month, Zhejiang King revealed that its air conditioner business assets were acquired indirectly from another listed air conditioner company through a series of asset restructuring schemes. However, the media reports raised concerns about the overpricing of shares and allegations that the company attempted to list the same assets twice. These allegations will be thoroughly examined during the investigation by the Shanghai Stock Exchange.
Financial Details and Market Comparison
Zhejiang King aimed to raise 2.38 billion yuan ($325.98 million) through its IPO, with shares priced at 68.07 yuan each. The company’s prospectus stated that its IPO was priced at 51.29 times the projected earnings for 2022. In comparison, its listed peers have an average price-to-earnings ratio of 27.8, according to the China Securities Index Co. These figures will be taken into account during the investigation to assess the validity of the overpricing claims.
Conclusion
The Shanghai Stock Exchange’s decision to investigate Zhejiang King Co Ltd following the suspension of its IPO demonstrates the regulators’ commitment to maintaining market integrity and investor confidence. The allegations of overpricing and attempts to list the same assets twice will be thoroughly examined. As China continues its efforts to revitalize the stock market, it is crucial to ensure transparency and fairness in the IPO process.
