Ping An Good Doctor's shares slide below IPO price on valuation worries

HONG KONG (Reuters) - Ping An Healthcare and Technology Co Ltd’s shares tumbled as much as 11 percent on their second day of trading on Monday as investors worried about the high valuations for the loss-making firm that saw Hong Kong’s largest new listing in 2018.

Ping An Good Doctor app, an online healthcare platform operated by Ping An Healthcare and Technology Co Ltd, is seen on a mobile phone in this illustration picture taken May 3, 2018. REUTERS/Florence Lo/Illustration

The operator of China’s biggest online healthcare platform had a tepid stock market debut on Friday, with its shares closing unchanged from their IPO price of HK$54.80. On Monday, they fell to a low of HK$48.90 before partially erasing the losses in the afternoon to trade at HK$50.90, down 7.0 percent.

The company, also known as Ping An Good Doctor, raised $1.12 billion in an IPO that priced at the top of its range. It had secured seven cornerstone investors including Singapore sovereign wealth fund GIC [GIC.UL], Canada Pension Plan Investment Board and U.S. asset manager BlackRock.

“This is within expectation; the stock’s pricing was high and it trailed the disappointing performance of previous new economy companies,” said Kingston Lin, CEO of Ox Financial Securities.

Shares of some other technology-related companies that floated recently have been weak in Hong Kong. ZhongAn Online P & C Insurance Co recently dropped below its IPO price. China Literature, which soared on its debut last year, has been declining and is now close to its IPO price.

The stock market performance of Ping An Good Doctor, which is backed by China’s biggest insurer by market value, Ping An Insurance Group Co of China Ltd, raises questions about investor appetite for potential flotations of other Ping An units.

These include Lufax, China’s biggest online wealth management platform, and Ping An Healthcare Management, a medical data collection and analysis business.

Ping An Good Doctor’s debut comes at a time when Hong Kong is implementing new rules to attract more tech and biotech IPOs to the city, away from other major centers like New York and the Chinese mainland.

Chinese smartphone and connected device maker Xiaomi [IPO-XMGP.HK] filed an IPO application in Hong Kong last week in which it could raise about $10 billion in the largest listing globally in almost four years.

Lin of Ox Financial said the market is holding a cautious view towards even the IPO of Xiaomi.

“The market has shifted focus from last year and it is not upbeat on tech companies anymore,” he said.

Reporting by Clare Jim; Editing by Muralikumar Anantharaman