#1KPMG Chinese Mainland and Hong Kong IPO markets 320 2023 Q1 review kpmg.com/cn 0.30 70.110 09.121#2Contents Global IPO landscape Imarket ✔ A-share IPO market Hong Kong IPO market KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved 0 0 0 1 10 Chinese Mainland and Hong Kong IPO markets | 2#3Global IPO landscape KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved TEEFT Chinese Mainland and Hong Kong IPO markets#42023 Q1 Global IPO market overview Funds raised (USD'B) Global IPO activity (1) (2019 – 2023 Q1) ■Q1 Funds raised Slow start for IPOs in 2023 Q1 500 450 - ■Q2 Q4 Funds raised . Number of deals: -20% . Funds raised: ~65% as compared to 2022 Q1 400 350 300 356 250 Persistent inflation Global landscape Interest rate hikes 200 150 249 141 198 100 % 50 112 55 19 0 15 30 Geopolitical 2019 2020 2021 2022 2023 uncertainties Recovery from Q1 YTD (% of full 214 252 498 334 259 pandemic year) (18%) (17%) (20%) (22%) (N/A) + Full 1,191 1,493 2,510 1,520 (N/A) year No. of deals (1) Analysis based on data as at 23 March 2023 Sources: Bloomberg and KPMG analysis, including REIT deals and excluding special purpose acquisition company ("SPAC" or "blank check") deals. KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 4#5Global top 5 stock exchanges Rank Stock exchange IPO proceeds (USD billion) 1 1 2023 Shanghai Stock Exchange 6.2 2 Shenzhen Stock Exchange 4.8 Q1 3 YTD Abu Dhabi Securities Exchange 2.6 4 NASDAQ Stock Exchange 2.1 5 HKEX 0.9 (USD billion) 17.9 1 sizeable IPO deal raising over US$1 billion in 2023 Q1 compared to 7 of such deals in 2022 Q1 IPO proceeds Rank Stock exchange 2022 1 Shanghai Stock Exchange Q1 2 Korea Stock Exchange YTD 3 Shenzhen Stock Exchange 4 Saudi Stock Exchange 5 NASDAQ 10.9 9.2 3.8 2.7 IPO proceeds Rank Stock exchange (USD billion) 2022 1 Shanghai Stock Exchange (Full 2 Shenzhen Stock Exchange year) 3 HKEX 4 Korea Stock Exchange 5 Frankfurt Stock Exchange 56.5 31.1 12.8 11.3 9.1 Analysis based on actual data as at 23 March 2023 and KPMG estimates forecasted to 31 March 2023. Sources: Bloomberg and KPMG analysis, included REIT deals and excluded special purpose acquisition company ("SPAC" or "blank check") deals. (1) (2) The exchange rate for USD/HKD is 7.75. (3) KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved A-share stock exchanges contributed 2 2 50% of global proceeds and ~ 30% of no. of deals In 2023 Q1 Chinese Mainland and Hong Kong IPO markets | 5#62023 global IPO market outlook Factors affecting 2023 global IPO market Regulatory developments ✓ Recovery from pandemic Inflation concerns Ongoing geopolitical uncertainties $ Change in banking landscape Global IPO market sentiment was weak in the first quarter of 2023, with ongoing economic uncertainties further worsened by the recent financial market instability. The global IPO market will remain challenged in the short term with interest rates predicted to increase further before the Federal Reserve ends its inflation battle. Paul Lau Partner Head of Capital Markets and Professional Practice KPMG China KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 6#7A-share IPO market 0.45 KPMG 10 03141 6612 0.4151 0.31 0.0041 5 0.5124 6 © 2023 KPMG, a Hong Kong SAR) partners affiliated with KPMG International Limited, a are member firms of the KPMG global organisation of independent member firms vate English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 7#8A-share IPO market: 2023 Q1 highlights . • Modest start to the year for A-share market A-share IPOs slowed down considerably in 2023 Q1 after a record breaking year, posting decreases in deals and funds raised compared to 2022 Q1, largely due to the lingering effects of the pandemic on the economy and the lack of a mega-deal akin to China Mobile's RMB56 billion offering in 2022 Q1. ⚫ The Shanghai Stock Exchange and Shenzhen Stock Exchange continue to outperform their global peers, ranking 1st and 2nd among the global stock exchanges in terms of funds raised. Registration-based system reform Emboldened by the success of the registration-based system on the STAR & ChiNext markets, on 17 February 2023, the China Securities Regulatory Commission expanded the registration-based system to cover all national securities exchanges and public offerings. A-share IPO activity in 2023 Q1 RMB 78.3B ~ 55% 73 Deals ~ 15% compared to 2022 Q1 compared to 2022 Q1 Advantages of the registration-based system Q Transparency Market Driven Note: All analysis is based on WIND data and included REIT deals as of 23 March 2023, adjusted to number of confirmed listings up to 31 March 2023, unless otherwise stated KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 8#9A-share IPO market activity SSE - Traditional SZSE - Traditional SSE - STAR* SZSE - ChiNext* BSE Total 2023 Q1 RMB 29.9B 17 deals RMB 6.6B 8 deals RMB 11.7B 9 deals RMB 25.8B 15 deals RMB 4.3B 24 deals RMB 78.3B 73 deals 2022 Q1 RMB 62.1B 10 deals RMB 5.8B 5 deals RMB 58.5B 27 deals RMB 56.3B 36 deals RMB 1.2B 7 deals RMB 183.9B 85 deals 2022 full year RMB 145.1B 40 deals RMB 39.6B 43 deals RMB 252.7B 123 deals RMB 179.6B 148 deals RMB 16.9B 83 deals RMB 633.9B 437 deals Note: All analysis is based on WIND data and included REIT deals as of 23 March 2023, adjusted to number of confirmed listings up to 31 March 2023, unless otherwise stated *The above statistics excluded companies transferred from BSE to STAR or ChiNext. KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 9#10A-share IPO sector distribution TMT dropped out of top 3 sectors by total proceeds in 2023 Q1, in contract to the top ranking in the same quarter last year which contributed over 50% of total proceeds as there was a mega-sized telecommunications carrier listed in 2022 Q1. 2023 Q1 ENR 13% Sector in terms of funds raised 2022 Q1 Healthcare / Life Sciences Others Industrials TMT 13% Others 41% 53% Infrastructure/ Real Estate 17% Note: All analysis is based on WIND data and included REIT deals as of 23 March 2023, adjusted to number of confirmed listings up to 31 March 2023, unless otherwise stated KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Industrials 27% Chinese Mainland and Hong Kong IPO markets | 10#11Top 10 largest A-share IPOS Proceeds 2023 Q1 Company Exchange Sector (RMB billion) $ 1 2 China Fund Management SPIC New Energy REIT * Hunan Yuneng New Energy Battery Material Co.,Ltd. SSE 7.8 Infrastructure / Real Estate SZSE-ChiNext 4.5 Industrials 3 Jiangsu Xukuang Energy Co., Ltd.# SSE 4.3 4 Greenworks (Jiangsu) Co., Ltd. SZSE-ChiNext 3.7 5 Wuxi Unicomp Technology Co., Ltd.# SSE-STAR 3.0 ENR Industrials Industrials 6 Beijing Energy International Solar Power REIT* SSE 2.9 7 Cinda Securities Co., Ltd. SSE 2.7 68 Hubei Jianghan New Materials Co., Ltd. SSE 2.4 Hubei Hongyuan Pharmaceutical Technology Co.Ltd. SZSE-ChiNext 2.4 Industrials Healthcare / Life Sciences 10 Guangdong Lvtong New Energy Electric Vehicle Technology Co.,Ltd SZSE-ChiNext 2.3 Industrials Infrastructure / Real Estate Financial Services Funds raised by top 10 IPOS 2023 Q1: RMB 36.0 billion ~45% of total proceeds 2022 Q1: RMB 100.6 billion ~ 55% of total proceeds 2 2022 Q1 Company Exchange Proceeds (RMB billion) Sector 1 China Mobile Limited SSE 56.0 2 Jinkosolar Co., Ltd. SSE-STAR 10.0 TMT Industrials 3 ASR Microelectronics Co., Ltd. SSE-STAR 6.9 TMT 4 Ganzhou Teng Yuan Cobalt New Material Co., Ltd. SZSE-ChiNext 5.5 Industrials 5 Isoftstone Information Technology (Group) Co., Ltd. SZSE-ChiNext 4.6 TMT 6 Shandong Sanyuan Biotechnology Co., Ltd. SZSE-ChiNext 3.7 Consumer Markets 7 Anhui Tongguan Copper Foil Group Co., Ltd. SZSE-ChiNext 3.6 8 Sicc Co., Ltd. SSE-STAR 3.6 Industrials TMT 9 Mabwell (Shanghai) Bioscience Co., Ltd. 10 Shenzhen Han's CNC Technology Co., Ltd. SSE-STAR SZSE-ChiNext 3.5 Healthcare Life Sciences 3.2 TMT * Refers to real estate investment trusts listings ("REITS") # Expected to list on or before 31 March 2023. Funds raised estimated is based on announced listing price. Note: All analysis is based on WIND data and included REIT deals as of 23 March 2023, adjusted to number of confirmed listings up to 31 March 2023, unless otherwise stated Source: Wind and KPMG analysis KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets 11#12A-share IPO pipeline A-share IPO active applicants 1200 1,138 139 1000 974 924 943 917 70 124 99 819 795 780 800 739 69 53 469 482 600 430 390 360 420 313 389 368 400 207 169 164 150 224 186 181 141 197 200 323 296 315 287 218 204 231 218 153 0 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3 2022 Q4 2023 Q1 A-share IPO applications - 2023 Q1 sector breakdown By number of companies Total number of companies: 819 Others 7% ENR 5% ■Consumer markets- 8% Healthcare / Life sciences 10% ■Industrials 42% ■Active applicants - traditional market ■Active applicants - ChiNext ■Active applicants - STAR Market ■Active applicants - BSE TMT 28% Note: All analysis is based on WIND data and included REIT deals as of 23 March 2023. Active applicants included applications suspended due to the expiry of their financial information (*). Historically these applications have been reactivated promptly with updated financial information submitted by the listing applicant. Source: Wind and KPMG analysis KPMG 57% of active applicants are applying for the STAR Market and ChiNext, with a focus on new technologies, new industries and outstanding innovation capabilities. © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Ett Industrials and TMT remain the top sectors among A-share IPO applicants, representing approximately 70% of the active IPO pipeline. Chinese Mainland and Hong Kong IPO markets | 12#132023 outlook: A-share market KPMG Post-pandemic recovery Post-pandemic reopening and favourable economic policies support the economic recovery. • Backed by a healthy pipeline of over 810 active applicants, IPO activities are expected to gradually pick up. Registration-based system unified markets nationwide • . Unifying the listing procedures across all boards helps improve the facilitation of a multi-level capital market. It will continue to elevate A-share market's openness and vitality, solidifying the market's competitiveness among other global listing venues. “ The A-share markets have demonstrated a commitment to improving their system and are well-positioned to take advantage of the government's economic stimulus to revive its IPO activities. We remain cautiously optimistic for the A-share IPO markets for the rest of the year. Louis Lau Partner Capital Markets KPMG China © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 13#14Hong Kong IPO market KPMG Er H 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets 14#15• Hong Kong IPO market: 2023 Q1 highlights Another resilient start to the year Hong Kong posted an increase in the number of deals despite being heavily impacted by global IPO sentiment, which is a testament to the city's resilience as an international financial centre. • Similar to its global peers, Hong Kong did not complete any major sizeable deals during 2023 Q1, leading to a significant decrease in funds raised. Launch of Specialist Technology Companies regime • Following the successful implementation of the listing regimes for innovative companies and SPAC, the Hong Kong Stock Exchange has further enhanced the capital market by launching the Specialist Technology Companies regime, which becomes effective on 31 March 2023. • The regime provides an alternative route for high-growth enterprises to list in Hong Kong, providing those companies with access to the city's deep pool of capital, and continuing to bolster Hong Kong's competitiveness and attractiveness. HKIPO activity in 2023 Q1 HKD 6.7B ↓~50% compared to 2022 Q1 18 Deals - 20% compared to 2022 Q1 Specialist Technology Next-generation information technology New energy & environmental protection Advanced hardware and software Advanced materials New food & agriculture technology Note: All figures are as of 23 March 2023, adjusted to number of confirmed listings up to 31 March 2023, included listing by introduction, and excluded SPAC deals and GEM transfer Source: HKEx and KPMG analysis KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 15#16Hong Kong IPO market activity Main Board GEM Total 2023 Q1 HKD 6.7B 18 deals HKD 6.7B 18 deals 2022 Q1 HKD 13.9B HKD 13.9B 15 deals 15 deals 2022 HKD 99.6B full year 84 deals HKD 99.6B 84 deals Note: All figures are as of 23 March 2023, adjusted to number of confirmed listings up to 31 March 2023, included listing by introduction, and excluded SPAC deals and GEM transfer Source: HKEX and KPMG analysis KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 16#17Hong Kong IPO sector distribution Deals were relatively small to start the year, which resulted in sector funds raised being mostly driven by the number of deals, which is topped by consumer markets and industrials in 2023 Q1 2023 Q1 Financial services 15% Sector in terms of funds raised 2022 Q1 Consumer markets Others 32% Healthcare/ Life sciences 19% Others Industrials 46% Note: All figures are as of 31 March 2023, included listing by introduction, and excluded SPAC deals and GEM transfer Source: HKEX and KPMG analysis KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Industrials 27% TMT 25% Chinese Mainland and Hong Kong IPO markets | 17#18Top 10 largest Hong Kong IPOS 2023 Q1 Company Proceeds (HKD billion) 1 Beijing SinoHytec Co., Ltd. 1.1 Sector Industrials 2 JF Wealth Holdings Ltd 1.0 Financial Services 3 Beauty Farm Medical and Health Industry Inc. 0.9 Consumer Markets 4 DPC Dash Ltd # 0.6 Consumer Markets 5 YH Entertainment Group 0.5 6 Shenzhen Pagoda Industrial (Group) Corporation Limited 0.5 7 Seacon Shipping Group Holdings Limited # 0.4 8 China Treasures New Materials Group Ltd. # 0.3 Sanergy Group Limited 0.3 10 Fenbi Ltd. 0.2 $ TMT Consumer Markets Transport and Logistics Industrials Industrials Education Funds raised by top 10 IPOS 2023 Q1: HKD 5.8 billion - 85% of total proceeds 2022 Q1: HKD 13.4 billion ~ 97% of total proceeds Proceeds 2 2022 Q1 Company Sector (HKD billion) 1 JL Mag Rare-Earth Co., Ltd. 4.2 Industrials 2 Huitongda Network Co., Ltd. 2.3 TMT 3 Ferretti S.p.A. 2.0 Industrials 4 Qingdao Ainnovation Technology Group Co., Ltd 1.2 TMT LQ 5 Lepu Biopharma Co., Ltd. 0.9 Healthcare / Life Sciences 6 Jiangsu Recbio Technology Co., Ltd. 0.9 Healthcare / Life Sciences 7 Jinmao Property Services Co., Limited 0.8 Infrastructure / Real Estate # Expected to list on or before 31 March 2023. Funds raised estimated is based on announced listing mid-price. 8 Arrail Group Limited 0.7 Healthcare Life Sciences 9 Semk Holdings International Limited 0.2 Consumer Markets 10 Clarity Medical Group Holding Limited 0.2 KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Healthcare / Life Sciences Note: All figures are as of 23 March 2023, adjusted to number of confirmed listings up to 31 March 2023, included listing by introduction, and excluded SPAC deals and GEM transfer (if any) Source: HKEX and KPMG analysis Chinese Mainland and Hong Kong IPO markets | 18#192023 outlook: Hong Kong IPO market A healthy IPO pipeline The IPO pipeline remains healthy with over 90 applicants waiting for a right window to list in the bourse. Specialist technology companies The new regime is expected to further attract listings of emerging and innovative companies. Just as the launch of Chapter 18A led to a new biotech financing ecosystem in Hong Kong, we are confident that the new Specialist Technology Companies regime will help drive growth in talent and investments for specialist technologies in Hong Kong and beyond. In the long run, the development of a specialist technology financing ecosystem will diversify Hong Kong's capital markets and create a more appealing environment for both issuers and investors. International companies The expansion of Stock Connect to foreign companies helps to attract international companies to list in Hong Kong and gain access to Mainland investors. Irene Chu Partner Head of New Economy and Life Sciences KPMG China Note: All figures are as of 23 March 2023 Source: HKEX and KPMG analysis KPMG © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Chinese Mainland and Hong Kong IPO markets | 19#2050- Contact us www KPMG Paul Lau Partner, ALEA Head of Capital Markets and Professional Practice KPMG China +852 2826 8010 DEBEAR [email protected] Louis Lau Partner, Capital Markets Group KPMG China +852 2143 8876 [email protected] Irene Chu Partner, Head of New Economy and Life Sciences KPMG China +852 2978 8151 [email protected] Terence Man Partner, Capital Markets Group KPMG China +86 (10) 8508 5548 [email protected] Mike Tang Partner, Capital Markets Group KPMG China +852 2833 1636 [email protected] © 2023 KPMG, a Hong Kong (SAR) partnership, are member firms of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved Elton Tam Director, Capital Markets Group +852 2978 8188 OLID 0011-0111 1801 001 KPMG China [email protected] Chinese Mainland and Hong Kong IPO markets | 20#21KPMG Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities. in ✔ f home.kpmg/cn/socialmedia The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. 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