Concerns Rise Over 'Peak Out' in China's IPO Boom... Unitree's Stock Price Halves

While major Chinese companies such as ChangXin Memory Technologies (CXMT) and Unitree are continuing with large-scale initial public offerings (IPOs), some are raising the possibility of a "peak out," arguing that this trend will be difficult to sustain.

According to Bloomberg on the 26th (local time), fueled by the artificial intelligence (AI) boom, the total scale of Chinese companies' IPOs reached 119 billion yuan (approx. 24.4 trillion won) in the third quarter, surpassing the 114 billion yuan (approx. 23.4 trillion won) recorded in the third quarter of 2023.

CXMT raised up to 66.61 billion yuan (approx. 13.7 trillion won) through its IPO last month, while Unitree secured 6.1 billion yuan (approx. 1.2 trillion won) through its IPO this month.

Additionally, Yangtze Memory Technologies Corp (YMTC) is preparing to raise 33 billion yuan (approx. 6.8 trillion won) via an IPO.

According to Bloomberg's tally, China's total IPO volume this year has exceeded 30 billion dollars (approx. 41.5 trillion won) for the first time since 2023.

The year 2023 is cited as a turning point for China's IPO market.

Bloomberg explained that although authorities promised to revitalize the capital market at the time, they also reined in the IPO boom out of concern over liquidity depletion, leading to a prolonged slump lasting several years.

Bloomberg noted that while investment demand is sufficient for now this year, the IPO market faces a test as investment momentum in the technology sector begins to weaken.

"As the AI trade weakened last June, market liquidity is drying up," said Yang Tingwu, a fund manager at Fujian-based Tongheng Investment. "Mutual funds, quantitative funds, and retail investors all have less capacity or interest in making additional investments, and government-backed funds are mostly net sellers."

He added, "Without additional capital inflows, it will be difficult to digest the current level of IPOs."

However, Bloomberg reported that there are still no official announcements that authorities are preparing new IPO regulations.

It also pointed out that, unlike in 2023, companies recently pursuing IPOs belong to strategic industries requiring massive capital, such as semiconductors and AI.

At the same time, Bloomberg noted that IPO fatigue is appearing in the market, with about a third of the companies that went public in the third quarter seeing their stock prices plummet by more than half from their peaks.

In particular, Unitree's stock price, which went public on the 19th, dropped to 53.7% of its intraday peak based on the closing price of the day.

Unitree's stock surged 629.44% right after the opening bell on its first trading day compared to its offering price (150.80 yuan), hitting 1,100 yuan before finishing the session at 845.0 yuan.

Since then, the closing price declined for five consecutive trading sessions through the 26th, following drops on the 20th (687.0 yuan), 21st (672.41 yuan), 24th (603.08 yuan), and 25th (602.8 yuan).

The closing price for the day fell 1.87% from the previous session to 591.53 yuan, failing to hold the 600-yuan mark.

In terms of market capitalization, it plunged from 444.9 billion yuan (approx. 91.7 trillion won) at its intraday peak down to 239.3 billion yuan (approx. 49.3 trillion won), evaporating 205.6 billion yuan (approx. 42.3 trillion won).

Reuters mentioned concerns over a "bubble," noting that investment enthusiasm for AI and robotics is running ahead of fundamentals, and added that prices are also being distorted due to China's short-selling restrictions and listing mechanism issues.

Singaporean media outlet Lianhe Zaobao reported that Unitree rushed into its listing at a high-risk stage, noting that as of the third quarter of last year, 73.6% of Unitree's humanoid sales came from orders by universities and research institutes, while its sales portion in industrial manufacturing sites remained small.

Bloomberg explained that local media reports indicate stock exchanges recently met with underwriting securities firms to discuss qualitative issues regarding IPO applications.

It added that unlike CXMT, YMTC is failing to undergo a fast-track process during its listing preparation, and some IPO procedures may take longer than initially expected by the market.

Despite these circumstances, companies are still lined up for IPOs.

Citing multiple anonymous sources, the Hong Kong-based South China Morning Post (SCMP) reported on the same day that AI startup DeepSeek is in the final stages of its latest fundraising round and is expected to pursue an IPO next year.

According to the sources, DeepSeek is valued at around 500 billion yuan (approx. 103 trillion won) prior to its fundraising and is in the process of raising 50 billion yuan (approx. 10.3 trillion won), with the round expected to close within this month.

DeepSeek reportedly secured a valuation of over 50 billion dollars (approx. 69.2 trillion won) and raised approximately 51 billion yuan (approx. 10.5 trillion won) during its first fundraising round last June.

The sources stated that DeepSeek is preparing for an IPO on the sci-tech innovation board known as the STAR Market (China's version of Nasdaq), aiming to apply for an IPO as early as the end of this year and list next year.

(Photo: Yonhap News)
※ Please note: This article was translated by AI and may contain errors.