Record high valuation IPOs in new board

Two new shares of Shanghai’s STAR Market opened subscription on Tuesday with record high IPO valuations, representing the booming expectation of investors on the new board. 

Raytron Technology set its IPO (initial public offering) price at 20 yuan (US$2.94) per share, valuing the company at 71 times earnings in 2018. Zhejiang Hangke Technology Inc set an IPO PE ratio of 56 times. 

Currently, three firms including Raytron, Hangke and Suzhou HYC Technology, which opened subscriptions last week, have launched IPOs on Shanghai’s new STAR Market — a Nasdaq-style sci-tech board.

The IPO opened to individual investors online and institutional investors offline. The shares will be listed on the STAR board.

China opened its new sci-tech board last month.

The three companies were oversubscribed by 233 to 335 times.

The higher ratio means that investors are willing to pay more for companies they believe have good growth and earning prospects, even if profits are currently low.

Investors should be cautious of the risks in the new STAR Market with new rules, analysts said.