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 IPO Assessment

Benefits of Going Public in Hong Kong: 

1.Raising Capital it allows them to use the additional capital to grow its operations, increase market share and increase profits. Through the IPO in Hong KOng, a company can raise substantial share capital by inviting the general public to subscribe for its shares. , a company may raise funds to finance its expansion plans, enhance its competitiveness or establish an improved financial structure Since the company is listed on the stock exchange it generates publicity and promotes the company to potential customers. This in turn can lead to an increase in market share for the company in its respective market.

 

2.Publicity  A public listed company always receives more media  attention than a private enterprise and hence helps to inform the company’s potential customers, employees, suppliers  etc. about the company, its products and services.

 

3.ImageThe perception of a company amongst its vendors, employees, bankers and  customers can significantly alter the destiny of a company. A public  listed company communicates seriousness, credibility and stature.

 

4. Motivation - Public listed companies can offer shares and stock as an incentive to their current and future employees. This is often instrumental in attracting and keeping key personnel.  Equity-based awards and ownership tend to be spread more broadly among management and employees in public companies compared to private companies

 

5. Liquidity - Companies listed on a stock exchange are typically worth more than similar companies that are privately held, Stockholders of public listed companies can buy and sell their shares in the open market. This provides investors or company owners with an ease exit and participation.   

 

6.Prestige - A public offering of stock implies stability and can help a  listed company gain prestige. Through the annual reports and announcement made by the listed company reduces the uncertainty around performance and hence increases the value of a business  

 

7.Mergers and Acquisitions - Since a public listed company has an assigned value to its stock, it will becomes easier to merge with and acquire other companies by using its stock as share exchange.

A Company to be list in Hong Kong Stock Exchange must at least meet one of the three financial criteria:
 

 

1. Profit Test

2.

Market Cap/ Revenue Test

3.

Market Cap/ Revenue/ Cashflow Test

Profit Attributable to Shareholders


At least HK$50 million in the last 3 financial years (with profits of at least HK$20 million recorded in the most recent year, and aggregate profits of at least HK$30 million recorded in the 2 years before that.

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Market Cap.

At least HK$200 million at the time of listing.

At least HK$4 billion at the time of listing

At least HK$2 billion at the time of listing

Revenue

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At least HK$500 million for the most recent audited financial year

At least HK$500 million for the most recent audited financial year

Cashflow

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Positive cashflow from operating activities of at least HK$100 million in aggregate for the three preceding financial years

*We provide pre-assessment services on your company financial status whether capable to be listed.

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