Three Chinese companies IPO'd in the US on Friday, and each dropped 15% or more.
All three landed among the year's bottom 10% of offerings by first-day return. The largest of the three, NetEase-backed education platform Youdao (DAO), was the worst performer with a 26% loss. It was joined by two micro-caps, aesthetic procedure provider Aesthetic Medical International (AIH; -16%) and traditional Chinese medicine seller Happiness Biotech (HAPP; -18%).
They are the first of a wave of China-based issuers hoping to tap US markets, despite poor returns from recent Chinese IPOs. Coming up, Chinese online real estate platform Fangdd (DUO) is scheduled for the first full week of November; seven others have submitted initial filings since September (YX.RC, QK, KRHO.RC, MOHO, HUIZ, YGMZ, GIP).
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The year's 16 Chinese issuers (ex-SPAC) average a return of -16%, with only three (19%) trading above issue. Since 2017, 66 Chinese companies have completed US IPOs; of these, the average return is -41%, and only 12 deals (18%) trade above the offer price.
In 2019, 136 companies have gone public. Of the year's 15 IPOs that initially fell 10% or more, only two have since traded up from the first-day close.
