(Bloomberg) — Moore Threads Technology Co., a leading Chinese artificial intelligence chipmaker, surged in debut trading in Shanghai after raising 8 billion yuan ($1.13 billion) in the year’s second-biggest on-shore IPO.
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The firm’s stock rose as much as 502% after being sold at 114.28 yuan a piece during the initial public offering. If the gains hold, the debut would mark the biggest first-day pop for an IPO of more than $1 billion since China’s IPO reforms in 2019, according to data compiled by Bloomberg.
The listing comes as optimism over China’s push for technological self-sufficiency intensifies, fueled by trade tensions and fears of a US tech crackdown. Moore Threads’ share frenzy stands out in an otherwise sluggish market, indicating strong appetite for investors in specific sectors such as this year’s AI winners.
Beijing-based Moore Threads is also among those benefiting from a market share gap left by the forced exit of Nvidia Corp. Earlier this year, regulators eased listing rules for unprofitable firms on the Nasdaq-style Star Board to boost homegrown startups.
“An increase of this scale can be somewhat expected from the strong demand, and this is one of those major IPOs that will go down in history and be remembered,” said Shao Qifeng, chief investment officer at Ying An Asset Management Co. “However, from experience, such memorable IPOs do not always bode well for their respective sectors as may be at least an indication of some corner.
Proceeds from the IPO will fund next-generation projects in AI and graphics chips as well as supplement working capital. The offer ranks after Huadian New Energy Group Co.’s $2.7 billion IPO. in July. Investor interest in the offering has been strong, with the retail tranche oversubscribed 2,750 times even after clawback, making it the second most sought-after IPO on the ground at $1 billion by 2022, Bloomberg data show.
Moore Threads’ net loss was 724 million yuan during the first three quarters of the year, according to a note from Sinolink Securities, down 19% from the year-ago period. Meanwhile, revenue increased by 182% to 780 million yuan.
Still, its valuations remain high. The ratio of Moore Threads’ sale price to 123 times the offer price of 114.28 yuan per share is higher than the average of 111 times for peers, according to a December 4 filing. The company recently asked its main sponsor to remind investors about the risks related to its valuations.