Following the lapse of Xiamen Hithium’s A1 application for its Hong Kong Stock Exchange (HKEX) IPO, industry observers are now watching closely to see if Hithium will attempt to refile. All signs point to Hithium making another push for public markets as soon as possible, given its urgent need for capital and to repair its damaged image. However, a second attempt should trigger far more intense regulatory scrutiny than the company faced the first time around. Regulators and investors should pay close attention to Hithium if they try again.
According to Hong Kong Stock Exchange regulations, companies whose applications have lapsed can submit fresh filings, but any new submission is treated as entirely new. This means Hithium would have to pay the listing fee again and resubmit all financial and disclosure documents for approval with regulators who are now fully aware of the circumstances that led to the initial failure.
Hithium’s earlier filing revealed a company operating with various fundamental red flags. Regulators will almost certainly demand more detailed explanations on said red flags including Hithium’s subsidy-dependent cash flow model and how it plans to achieve profitability without continued government support. They’ll want to understand the full impact of the major overseas client bankruptcy that wiped out significant future revenue. And they’ll dig deeper into the legal and regulatory complications that have continued to shroud the company.
Investors should be asking themselves and Hithium what happens when those subsidies stop?
Beyond these specific concerns, regulators may impose additional disclosure requirements or more stringent conditions before allowing the application to proceed. They might require more comprehensive financial projections, detailed risk assessments, or enhanced governance mechanisms. For a company already struggling with organizational capability and financial discipline, these additional hurdles could prove insurmountable.
It is clear to see that Hithium has been counting on the capital raise from its IPO to sustain operations, and with that funding now off the table, its cash position grows more worrying by the day. The current burn rate continues to deplete what little capital remains, creating intense pressure to secure funding quickly. This desperation might push Hithium to refile before it’s actually ready.
Market observers tend to highlight that companies who rush to refile after a lapsed application rarely fare well. As a whole, the main objective of an IPO is to raise capital and to provide liquidity to the existing investors, which at this stage will mostly be the founders, employees, and management, and in Hithium’s case could mean the CCP.
In Hithium’s case, the fundamental red flags that contributed to the initial lapse haven’t disappeared. The subsidy-driven business model remains questionable, the revenue impact from their largest client, Powin, bankruptcy is still being felt, and the legal and regulatory issues continue to mount. The question that remains is whether Hithium can possibly meet the higher bar that regulators will set, or whether this second attempt will simply confirm what many observers already suspect: that Hithium isn’t ready for public markets and may never be.