Chinese Rare Earth Magnet Producer's Stock Market Slumped Despite EV Boom

- 14 January 2022 23:07 WIB
The numbers revealed on Friday were unexpected. (Unsplash/Sigmund)
The numbers revealed on Friday were unexpected. (Unsplash/Sigmund)

JAKARTADAILY.ID - JL MAG Rare-Earth Co., a major Chinese manufacturer of rare earth magnets for electric vehicles, wind power generators, and energy-efficient air conditioners, slumped 17% in their Hong Kong stock market debut.

The numbers revealed on Friday were unexpected, considering the form is a key player in a red-hot sector of the electric vehicle market. It was sold at the bottom of the marketed range dubbed as the biggest offering so far this year in the Asian financial hub.

The producer of magnetic rare-earth materials finished the session at HK$28.20, below an offer price of HK$33.80 apiece in the sale that raised HK$4.24 billion ($544 million). The Chinese company is also already listed in Shenzhen, where it fell 1.4% on Friday after the underwhelming debut.

It is, however, the first offering to raise more than $500 million in Hong Kong this year. China’s crackdown on several private enterprises and the looming threat of rising interest rates cast a shadow over deals in the Asian financial hub.

According to Bloomberg, the slow 2022 start shows major differences with the 2021 busy kickoff where 16 companies were priced nearly $8 billion worth of shares.

Supported by Citic Securities Co. and BNP Paribas SA as joint sponsors for its Hong Kong deal, LG MAG Rare-Earth previously said that it plans to use the profits from the share sale for construction of a production base in Ningbo, several potential acquisitions throughout 2023, and expansion of a global industry-chain layout.

According to the company’s prospectus, profit for the six months ending June 2021 saw a 141% increase when compared to the same period a year earlier, bringing in a whopping 220.6 million yuan ($35 million) for the company.

Editor: Mukhtar Wijaya

Source: Bloomberg

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