Li and Chang anticipate a “repeat of the 2020-2022 story”, but with “diminished upside”. “HKEX outperformed the Hang Seng index significantly during the last ADR homecoming cycle, but current upside potential is relatively constrained given that most large-cap ADRs have already listed on the HKEX.”
Still, with a forecast of HK$160 billion for the Hong Kong IPO market in 2025 — CATL already raised US$5.2 billion ($6.73 billion) earlier this month — Li and Chang believe HKEX IPO demand will remain “resilient”.
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Thus, the analysts are keeping their “add” call on Hong Kong-listed HKEX with an unchanged target price of HK$440 ($72.60), built on their expectation of a “strong” 15% to 40% average daily turnover growth driving an 8% to 15% net profit growth over FY2025 to FY2027. HKEX has a Dec 31 financial year-end.
Five large IPOs
Li and Chang initiated coverage on HKEX on March 10, projecting “five large IPOs” with fundraising size over US$1 billion of HK$7.8 billion.
This “remains on track”, say the analysts. Apart from CATL’s US$5.2 billion listing, Hengrui Pharmaceuticals also raised US$1.2 billion last week. Meanwhile, Haitian Flavoring has passed the listing hearing, note the analysts.
Other “jumbo IPOs” include Chery Automobile and Sany Heavy Industry. Both firms are reportedly aiming to raise US$1.5 billion each.
Regulatory tailwinds
Li and Chang see regulatory tailwinds sustaining over 2025. In May, HKEX launched a technology enterprises channel to further facilitate new listing applications from prospective specialist technology companies and biotech companies, providing preliminary guidance and a new confidential filling option.
In May, China Securities Regulatory Commission reiterated its support for Chinese companies to conduct IPOs on HKEX.
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“As such, we are now less concerned over the regulatory risks that may hurt the Hong Kong IPO market,” they write.
HKEX reported its 1QFY2025 results on April 30, posting record quarterly revenue of HK$6.9 billion, up 32% y-o-y; and record quarterly profit of HK$4.1 billion, up 37% y-o-y.
“Equity capital raising activities in Hong Kong saw a remarkable revival in 1Q2025,” said bourse leaders, with a total year-to-date deal value of US$20 billion as at April 25, ranking second globally after the US.
As at 10.41am, HKEX shares are trading HK$7.60 up, or 1.94% higher, at HK$398.60.
Charts: CGSI
