#1KPMG Mainland China and Hong Kong IPO markets 2022 mid-year review kpmg.com/cn#2Contents Global IPO landscape KPMG میرا A-share IPO market Hong Kong IPO market © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 1#315.51 306 89.46 399.25 14.79 525 19 41.32 65.59 31.37 Global IPO landscape 0.50% 9919 9.14 0.91% 4514 0.82% KPMG 9.66 2.19 10.51% 15 955.45021 244.35 270.04 25.69 767.15 779.16 12.01 © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets XAM MSW LBY CFY JZT 2#4Global landscape Funds raised (USD'B) 500 Global IPO activity (1) (2018 – 2022) ■H1 Funds raised ■H2 Funds raised 235 Geopolitical and economic uncertainties continue to taint global IPO market sentiment, resulting in a notable decrease in fund-raising activities as compared with 2021 H1. Nevertheless, IPO activities in terms of number of deals and funds raised in the first half still remained comparable over the past five years. 450 400 350 300 250 200 208 150 111 139 233 100 50 98 96 74 71 0 2018 2019 2020 2021 2022 H1 (% of full 719 509 448 1,155 637 year) (48%) (43%) (30%) (46%) N/A Full year 1,485 1,191 1,493 2,510 N/A No. of deals Only Asia-Pacific region marked an increase in terms of funds raised comparing the same period last year, mainly due to several sizable deals in the A-share market. (1) Analysis based on data as at 23 June 2022 Sources: Bloomberg and KPMG analysis, including REIT deals and excluding special purpose acquisition company ("SPAC" or "blank check") deals. KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets | 3#5Global landscape IPO proceeds Rank Stock exchange (USD billion) 1 1 Shanghai Stock Exchange 31.9 2022 2 Shenzhen Stock Exchange 14.4 H1 3 Korea Stock Exchange 10.9 4 Dubai Financial Market 6.1 5 National Stock Exchange of India 5.2 IPO proceeds Rank 1 2021 2 New York Stock Exchange H1 3 4 Shanghai Stock Exchange 5 Stock exchange (USD billion) NASDAQ 50.7 37.2 HKEX 27.7 24.0 London Stock Exchange 13.7 IPO proceeds Rank 2021 1 (Full 2 year) 3 4 Shanghai Stock Exchange HKEX 5 Shenzhen Stock Exchange Stock exchange (USD billion) NASDAQ 100.6 New York Stock Exchange 61.2 58.1 43.1 27.6 Analysis based on data as at 23 June 2022 (1) (2) The exchange rate for USD/HKD is 7.75. (3) Sources: Bloomberg and KPMG analysis, including REIT deals and excluding special purpose acquisition company ("SPAC" or "blank check") deals. KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). The Shanghai Stock Exchange and the Shenzhen Stock Exchange raised a total of USD 46.3B, representing more than 48% of the global IPO proceeds as of 23 June 2022. Three out of the Top 10 IPOs in terms of funds raised are contributed by the ENR sector. Mainland China and Hong Kong IPO markets 4#62022 global IPO market overview Global IPO markets faced challenges IPO market sentiment has been continuingly affected by the difficult market conditions. This resulted in reduced market activities, including cross-border deals and mega IPO deals. As such, the global IPO markets have slowed down both in terms of number of deals and funds raised comparing with the same period last year. US inflation concerns On-going pandemic development 8 Regulatory changes The global IPO market will continue to be influenced by economic and geopolitical uncertainties in the near term. Nevertheless, strong pipelines in the major IPO markets indicate that there remains strong demand for fund raisings. We expect more sizable deals getting done over the coming months as sentiment improves. Paul Lau Partner, " Head of Capital Markets and Professional Practice KPMG China +852 2826 8010 [email protected] Interest rate hikes Geopolitical uncertainties KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 5#7Ο 010 0 OTI O KPMG A-share IPO market OF TLOO 010- 00 1000 © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets O 6#8A-share IPO market: 2022 H1 highlights Steady A-share market activities Countering the global trend, the A-share market is recording an increase in funds raised attributable to a number of sizeable listings. The Shanghai Stock Exchange and Shenzhen Stock Exchange have accounted for close to half of the global IPO proceeds during the first half of the year. Sizeable listing of a oil giant during 2022 H1 One of China's three oil giants which is listed in Hong Kong had completed its listing on the A-share market in April this year, benefiting from the program for domestic listings of red chip enterprises. Funds raised from the deal totaled RMB 32.3 billion, making it the 2nd largest IPO in the A-share market in 2022 H1. 172 Deals RMB 327.2B 32% reduction in terms of number of listings 35% increase in terms of funds raised Number of deals and funds raised Comparison with 2021 H1 Continuously contributed by STAR and ChiNext The STAR Market and ChiNext continued to show their importance in the A-share market during 2022 H1, contributing seven out of the Top 10 A-share IPOs by size. Supported by a healthy pipeline, these markets are expected to remain as a key driver for the A-share IPO market for the rest of the year. 122 Deals 71% of the market RMB 203.9B 62% of the market Sources: All analysis is based on WIND data as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, unless otherwise stated KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). STAR & ChiNext Mainland China and Hong Kong IPO markets 7#9A-share IPO market activity SSE - Traditional SZSE - Traditional SSE - STAR SZSE - ChiNext BSE# Total 2022 H1 RMB 108.3B 17 deals RMB 12.0B 14 deals RMB 115.6B 53 deals RMB 88.4B 69 deals RMB 2.9B 19 deals RMB 327.2B 172 deals 2021 RMB 91.1B RMB 27.7B H1 59 deals 24 deals RMB 70.8B 86 deals RMB 52.8B 85 deals N/A RMB 242.4B 254 deals 2021 RMB 188.7B Full 93 deals RMB 38.7B 38 deals RMB 202.9B 162 deals RMB 147.5B 199 deals RMB 2.0B 11 deals RMB 579.8B 503 deals year Note: All analysis is based on WIND data and included REIT deals as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, unless otherwise stated # Beijing Stock Exchange began to trade on 15 November 2021. The above statistics excluded companies transferred from NEEQ Select to BSE. KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets | 8#10Sector distribution: A-share top 3 25.2 58.9 0.23 760 9.56 74.6 -45.1740 920 With a sizeable listing of a state-owned TMT company, TMT is the top contributor in the A-share market during 2022 H1. 18.8% TMT Top 3 sectors of 2022 H1, by total funds raised Top 3 sectors of 2021, by total funds raised 44% 27% Industrials 5.6 The 2022 Government Work Report puts forward the goal to promote green and low- carbon development. With measures stimulating new energy consumption as well 8.57 43.5 -43 as accelerating application of green low-carbon technologies, funding demand will be boosted for R&D in the renewable energy sector. Sources: All analysis is based on WIND data and included REIT deals as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, unless otherwise stated KPMG ENR 13% 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). M Industrials TMT 29% 26% Healthcare / Life Sciences 15% Mainland China and Hong Kong IPO markets 9#11Top 10 largest A-share IPOS 2022 Company Exchange H1 Proceeds (RMB billion) Sector $ 1 China Mobile Limited SSE 56.0 TMT 2 CNOOC Limited SSE 32.3 ENR 3 Jinkosolar Co., Ltd. SSE-STAR 10.0 4 Huaxia China Jiaojian Expressway* SSE 9.4 5 ASR Microelectronics Co., Ltd. SSE-STAR 6.9 TMT 6 Suzhou Novosense Microelectronics Co., Ltd SSE-STAR 5.8 TMT 7 Sany Renewable Energy Co., Ltd SSE-STAR 5.6 Industrial Manufacturing 8 Ganzhou Teng Yuan Cobalt New Material Co., Ltd. SZSE-ChiNext 5.5 ENR 9 Isoftstone Information Technology (Group) Co., Ltd. SZSE-ChiNext 4.6 TMT 10 Shandong Sanyuan Biotechnology Co., Ltd. SZSE-ChiNext 3.7 Consumer Markets. ~ Industrial Manufacturing Infrastructure / Real Estate Funds raised by top 10 IPOs 2022 H1: RMB 139.8 billion -43% of total proceeds 2021 H1: RMB 70.4 billion 29% of total proceeds 2021 Company Exchange H1 Proceeds (RMB billion) Sector 1 China Three Gorges Renewables (Group) Co., Ltd. SSE 22.7 ENR 2 Ping An Guangzhou Comm Invest Guanghe Expressway* SZSE 9.1 Infrastructure / Real Estate 3 Everdisplay Optronics (Shanghai) Co., Ltd. SSE-STAR 8.2 TMT 4 CICC GLP Warehouse Logistics* SSE 5.8 Infrastructure / Real Estate 5 Tianneng Battery Group Co., Ltd. SSE-STAR 4.9 Industrials 6 Zheshang Securities Zhejiang Expressway* SSE 4.3 Infrastructure / Real Estate 7 China Railway Construction Heavy Industry Corporation Limited SSE-STAR 4.2 Industrials 8 Huali Industrial Group Company Limited SZSE-ChiNext 3.9 Consumer Markets 9 Bank of Chongqing Co., Ltd. SSE 3.8 Financial Services 10 Soochow Suzhou Industrial Park Expressway* SSE 3.5 Infrastructure / Real Estate * Refers to real estate investment trusts listings ("REITS") Note: All analysis is based on WIND data as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, unless otherwise stated Source: Wind and KPMG analysis KPMG 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 10#12A-share IPO pipeline A-share IPO applications A-share IPO applications 2022 Q2 sector breakdown 1000 924 917 By number of companies Total number of companies: 856 893 856 2% 70 780 795 805 4% 20 800 77 3% 739 53 620 457 482 8% 600 361 430 420 395 514 122 39% 389 368 10% 101 400 251 226 247 224 186 181 141 157 197 200 413 247 32% 208 189 218 204 231 218 227 153 0 2020 2020 2020 Q1 Q2 2020 2021 2021 2021 2021 2022 2022 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Active applicants - traditional market Active applicants - STAR Market ■Active applicants - ChiNext Active applicants - BSE Consumer markets ■Infrastructure / Real estate Transport, logistics and others Note: All figures, and included REIT deals, are as of 23 June 2022, unless otherwise stated. STAR market active applicants included applications suspended due to the expiry of their financial information (PE). Historically these applications have been reactivated promptly with updated financial information submitted by the listing applicant. Source: Wind and KPMG analysis ■Industrial manufacturing ■Healthcare / Life sciences ENR ■Financial services TMT A-share IPO pipeline remains at high level with 856 active applications currently. Steady demand for fund-raising activities is expected in the A-share market. Industrial manufacturing, consumer markets and infrastructure / real estate are the top sectors - contributing 69% of the traditional market pipeline. Industrial manufacturing, TMT and healthcare / life sciences dominate the STAR and ChiNext pipeline, representing 93% of the STAR and ChiNext pipeline. KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 11#132022 H2 outlook: A-share market While uncertainties continue to impact the global economic environment, China's State Council has rolled out detailed policy measures to control the COVID-19 pandemic while continuing to promote high quality economic development. These measures are expected to aid the country in achieving sustained growth of the domestic economy, creating a favourable environment for fund- raising in A-share markets. The IPO pipeline remained robust with about 856 applicants. This is mainly attributable to the number of applicants in the STAR Market and the ChiNext board, indicating solid confidence and market recognition. In terms of sectors, TMT and industrial manufacturing comprised 71% of the pipeline and they are expected to remain the key drivers of IPOs on A-share markets. With the country's effective control of the pandemic, combined with fiscal and monetary measures to support growth, the economy in mainland China is expected to gradually improve over the rest of year, creating a favourable environment for fund-raising. The registration-based IPO system is expected to be adopted throughout A-share markets this year, further stimulating IPO activities in mainland China's capital market. Louis Lau Partner Capital Markets KPMG China KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 12#14KPMG Hong Kong IPO market 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 13#15Hong Kong IPO market: 2022 H1 highlights Activity slowed down amid macro-economic uncertainty In line with the global market sentiment, Hong Kong's IPO activities have slowed recording a 92% year-on-year decrease during the first six months of the year in terms of total proceeds raised. So far 24 deals have been completed, bringing in HKD 17.8 billion. 24 Deals Raised a total of HKD 17.8B $ Number of deals and funds raised The continuing development of SPAC The SPAC regime in Hong Kong has had a steady start to this year with 13 listing applications being filed and 2 having listed. As market uncertainties fade over time, we expect to see more SPAC listings in the bourse. Further homecoming listings Hong Kong continues to be the natural choice for homecoming listings because of the city's geographical proximity and its capital flow mechanisms with mainland China, underpinned by the current uncertainties Chinese issuers are facing in the US market. 2 Deals Raised a total of HKD 2.0B 3 Homecoming listings Including 2 listing by introduction deals SPACS Homecoming listings Note: All figures are as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, included listing by introduction, and excluded SPAC deals and GEM transfer Source: HKEX and KPMG analysis KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 14#16Hong Kong IPO market activity 2022 H1 Main Board GEM Total HKD 17.8B 24 deals HKD 17.8B 24 deals HKD 214.2B 2021 H1 45 deals HKD 0.1B 1 deal HKD 214.3B 46 deals HKD 333.8B 2021 Full year 96 deals HKD 0.1B 1 deal HKD 333.9B 97 deals Note: All figures are as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, included listing by introduction, and excluded SPAC deals and GEM transfer Source: HKEX and KPMG analysis KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 15#17Hong Kong's SPAC listing regime 13 Applications Of which 2 are listed, raising a total of HKD 2.0B SPACS The SPAC regime is expected to bring renewed momentum to the Hong Kong market this year and beyond, attracting more New Economy companies, including new energy, healthcare, biotechnology and green finance firms on the local exchange. Note: All figures and analysis are based on all 13 SPAC applications as of 24 June 2022 Source: HKEX and KPMG analysis KPMG Sector of de-SPAC targets* 11% 4% 3% 7% 29% 21% 25% ■ TMT ■Consumer markets ■Industrial manufacturing ■Transport, logistics and others ■Healthcare / Life sciences ■ENR ■Financial services © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). *Each SPAC may have more than one target sector Mainland China and Hong Kong IPO markets |16#18Sector distribution: Hong Kong top 3 25.2 9.56 58.9 74.6 0.23 760 -451 740 720 67 8.8 2450 700 901 11.56 Industrials, TMT and 813 Healthcare / Life sciences rank among the top 3 sectors in both years and continue to be the major contributors in the Hong Kong IPO market. 85426 Healthcare / Life 43.5 sciences listings are expected to remain as one 9.57 5.6 of the top sectors this year with the largest number of applications in the pipeline. Note: All figures are as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, included listing by introduction, and excluded SPAC deals and GEM transfer Source: HKEX and KPMG analysis KPMG MA Industrials TMT Top 3 sectors of 2022 H1, by total funds raised 37% 28% MA TMT 間 Top 3 sectors of 2021, by total funds raised 40% Healthcare / Life sciences 22% Healthcare / Life sciences 23% ■■ Industrials 11% 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 17#19Top 10 largest Hong Kong IPOS 2022 Company H1 Proceeds (HKD billion) Sector 1 JL Mag Rare-Earth Co., Ltd. 4.2 Industrial Markets 2 Huitongda Network Co., Ltd. 2.3 TMT 3 Ferretti S.p.A. 2.0 Industrial Markets 4 Qingdao Ainnovation Technology Group Co., Ltd 1.2 TMT 5 Yunkang Group Limited 1.2 6 Lepu Biopharma Co., Ltd. - B 0.9 Healthcare / Life Sciences Healthcare Life Sciences 7 Jiangsu Recbio Technology Co., Ltd. - B 0.9 Healthcare / Life Sciences 8 Jinmao Property Services Co., Limited 0.8 9 Zhihu Inc. W 0.8 TMT 10 Arrail Group Limited 0.7 Healthcare / Life Sciences Infrastructure / Real Estate $ Funds raised by top 10 IPOs 2022 H1: HKD 15.0 billion ~ 84% of total proceeds 2 2021 H1: HKD 165.4 billion ~ 77% of total proceeds 2021 Company H1 Proceeds (HKD billion) Sector 1 Kuaishou Technology - W 48.3 TMT 2 JD Logistics, Inc. 28.3 Transport, Logistics and Others 3 Baidu Inc SW 23.9 TMT 4 Bilibili Inc SW 23.2 TMT 5 Trip.com Group Ltd. - S 9.8 TMT CO 6 Linklogis Inc. - W 9.2 7 JOINN Laboratories (China) Co., Ltd. 6.5 Financial Services Healthcare Life Sciences 8 Autohome Inc. - S 6.1 TMT 9 Nayuki Holdings Limited 5.1 Consumer Markets Note: All figures are as of 23 June 2022, adjusted to number of confirmed listings up to 30 June 2022, included listing by introduction, and excluded SPAC deals and GEM transfer 10 China Youran Dairy Group 5.0 Consumer Markets Source: HKEX and KPMG analysis KPMG 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 18#202022 H2 outlook: Hong Kong IPO market Global geopolitical, economic uncertainties and the ongoing pandemic, however, will continue to sully sentiment for the rest of the year in Hong Kong. Momentum is expected to pick up gradually as these uncertainties fade out, fuelled by the solid IPO pipeline as more than 170 applicants continue to wait to list on the city's bourse. In order to encourage the listing of specialist technology companies, authorities in Hong Kong are now reviewing the listing rules and considering whether to revise the listing requirements. More details on this matter are expected to be announced during the second half of the year. Despite the challenging funding environment and global market uncertainties, businesses across different sectors continue to purse major digital transformation and decarbonisation initiatives. Such demands are creating opportunities for companies involved in digital and sustainable/renewable technologies which would be attractive to strategic and corporate investors. " Homecoming and life science listings would remain the key focus, as Hong Kong continues to be the natural choice for homecoming listings, and with the relentless development for biotech fund-raising and investment ecosystem in the bourse. Irene Chu Partner Head of New Economy and Life Sciences KPMG China KPMG © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). Mainland China and Hong Kong IPO markets 19#21Contact us KPMG Paul Lau Partner, Head of Capital Markets and Professional Practice KPMG China +852 2826 8010 [email protected] Louis Lau Partner, SB Capital Markets Advisory Group KPMG China sent Irene Chu Partner, Head of New Economy and Life Sciences KPMG China +852 2978 8151 [email protected] Terence Man Partner, Capital Markets Advisory Group KPMG China +86 (10) 8508 5548 [email protected] +852 2143 8876 [email protected] Mike Tang Partner, Capital Markets Advisory Group KPMG China +852 2833 1636 [email protected] © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). 110 Elton Tam Director, Capital Markets Advisory Group KPMG China +852 2978 8188 [email protected] 20 Mainland China and Hong Kong IPO markets 20#22KPMG 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. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. © 2022 KPMG, a Hong Kong (SAR) partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. Printed in Hong Kong (SAR). 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