Wuxi AppTec tells Chinese investors to go slow as obsession with unicorns explodes
Shares of the medical researcher, which listed in Shanghai this month after delisting from New York in 2015, have surged almost five-fold from its IPO price
Wuxi AppTec, China’s biggest contract medical researcher that floated in May, has made the unusual move of issuing a statement warning its share price is rising too fast and its valuation is excessive.
The company closed at 107.36 yuan on Friday in Shanghai, rising by the allowed daily maximum of 10 per cent for the 13th straight session. Its share price has now surged almost five-fold from its initial public offering price.
“The company’s price-to-earnings ratio is relatively high compared with comparable companies in the industry,” said Wuxi AppTec in the statement filed to the stock exchange. “We particularly remind investors of investment risks, rational decision making and prudential investments.”
But shareholders seemed to be ignoring the warning.
The buying binge had made Wuxi AppTec almost a third more expensive than the industry average valuation, the company said.
The Wuxi frenzy is now seen by some brokers as highlighting a growing challenge facing China’s regulators, who have been gearing up to lure larger overseas-listed Chinese companies and unicorns in the technology industry to list domestically.
