Electric vehicle maker Li Auto makes weak HK debut

HONG KONG • Chinese electric vehicle maker Li Auto made a weak debut in Hong Kong yesterday as its shares traded flat, while the company also flagged it might consider a mainland listing.

The company raised US$1.52 billion (S$2.06 billion) by pricing its stock at HK$118 (S$20) each in its dual primary listing in the city. Li Auto is also listed in New York.

Earlier in the day, Li Auto shares fell by as much as 2.1 per cent, with the Hong Kong's Hang Seng Index trading flat in the early Asia session. The weaker debut followed a 1.1 per cent rise in New York-listed Li Auto shares on Wednesday.

Li Auto's Hong Kong deal is the first major listing of a Chinese company after Chinese authorities implemented strict new regulations on industries ranging from tech to education and online gaming.

Officials have also flagged tighter rules on companies listing overseas that have major data components in their businesses.

At HK$118 each, the price represented a 3.2 per cent discount to the level where the New York stock was trading before the Hong Kong deal was launched on Aug 3.

Li Auto's president Shen Yanan told reporters that it is internally discussing the possibility of issuing A-shares in China.

It is developing battery electric vehicles in addition to its current extended range electric vehicle model, which uses a different powertrain, to expand its customer base, said Mr Shen.

The first battery electric model is expected to be sold in 2023.

Li Auto also plans to set up a factory in Beijing to expand manufacturing capacity and to have more showrooms in malls across Chinese cities, Mr Shen added.

The firm had aimed to raise more funds at its Hong Kong debut, but the stock dropped 4 per cent in the United States last Thursday before the price was finalised, which reduced the amount that investors were willing to pay.

The United States-listed stock has fallen 8.75 per cent in the past week but remains 6.5 per cent higher for the year.

"Since the price for the Hong Kong shares has been set, Li Auto's share price in the US has been down quite a bit so that has set the tone for Hong Kong," said Kingston Securities director Dickie Wong.

"Given it's a dual listing, we should see the Hong Kong shares trade in line with the US, and there doesn't seem to be much upside at the moment."

Li Auto sold 100 million shares in the Hong Kong deal and chose a dual primary listing rather than a secondary listing as it has been listed in New York for less than two years.

Under Hong Kong rules, a secondary listing requires at least two financial years of good regulatory compliance on another qualifying exchange.

Dual primary listing allows qualified Chinese investors to take part through the Stock Connect regime linking Chinese and Hong Kong markets, according to the exchange's rules.

REUTERS