Allowing an issuer to proceed toward listing on the Hong Kong Stock Exchange with glaring omissions in its disclosure, as mentioned in our previous article, “What Hithium Didn’t Fix in its Second A1 Filing,” not only raises questions about Hithium, it raises questions about the credibility and effectiveness of the Hong Kong Stock Exchange itself, as well as the oversight exercised by the Securities and Futures Commission. Sources with knowledge in the matter even go as far to say that regulators believe that the surge in listings on the HKEX has led to many banks working on multiple IPOs simultaneously, resulting in unprofessional applications that endanger the Exchange and its investors.
In recent years, Hong Kong regulators have sharpened their focus on cases of alleged market manipulation and corporate fraud that have tarnished Hong Kong’s reputation as a global financial centre. As such the HKEX has made a concerted and public effort to improve its listing quality. The Exchange has repeatedly emphasized that it is no longer willing to serve as a venue for poorly prepared, aggressively marketed, or structurally weak IPO candidates. Reforms to the Listing Rules, heightened scrutiny of revenue quality, and a more assertive approach to rejecting or delaying applications were all intended to restore confidence after years of questionable listings damaged Hong Kong’s reputation as a global financial center.
However, Hithium’s A1 filing is a direct test of those commitments. The vendor financing arrangement embedded in the Staythorpe project is not a minor omission. It goes to the heart of Hithium’s revenue recognition, counterparty risk, capital structure, liquidity, and is by most accounts representative of how Hithium conducts its business. By any reasonable standard, it constitutes a material transaction and a material risk factor. Yet it is effectively absent from the Application Proof, reduced instead to vague language about “diversified settlement terms.”
If such a payment scheme structure can pass through the HKEX vetting process without being clearly disclosed, explained, and risk-weighted, it undermines the very purpose of the A1 regime. The Application Proof is meant to allow regulators, analysts, and the public to assess whether a company is suitable for listing. It cannot serve that function if issuers are permitted to obscure high-risk financing arrangements behind generic wording that strips the meat and bones away from the transactions of their economic reality.
This issue is particularly sensitive given the role of the SFC. The SFC has repeatedly stressed that disclosure is the cornerstone of investor protection, especially for pre-revenue or capital-intensive companies operating in strategically sensitive sectors. A company operating in the energy storage industry is not a niche industry. It intersects national infrastructure, public utilities, and government policy space while relying on government subsidies, self-financed sales, and subordinated project exposure, which should be subject to heightened, not relaxed, scrutiny.
Hithium’s first A1 application failed. The second was submitted with no meaningful improvement in its disclosure transparency. If regulators allow the application to progress without demanding full disclosure and risk analysis of the vendor financing, it signals that persistence may matter more than compliance and that issuers can wear regulators down rather than meet requirements.
This is precisely the outcome Hong Kong Stock Exchange has publicly said it wants to avoid. Poor-quality listings not only harm investors who participate in an IPO but also damage secondary market confidence, increase volatility, and deter high-quality issuers from choosing Hong Kong as a listing destination. The Exchange’s recent efforts to raise the bar will ring hollow if a case like Hithium’s is allowed to proceed unchecked.
At a minimum, HKEX and the SFC should require Hithium to fully disclose the existence, structure, purpose, and risks of its vendor financing arrangements, explain how they affect revenue quality and leverage, and address the legal and regulatory basis on which such financing is provided. Anything less risks sending the message that material omissions are tolerable as long as they are guilefully worded. How this application is handled by the HKEX and SFC will be read by the market as a signal of whether Hong Kong is serious about protecting investors and restoring trust, or whether it is once again prepared to compromise on disclosure quality in pursuit of listing volume.
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