China鈥檚 fourth-largest smartphone maker Honor took an important step towards a domestic stock market debut on Thursday by filing documents with securities regulators.
The company completed initial public offering (IPO) counselling recordation, the formal filing of pre-IPO guidance with the China Securities Regulatory Commission (CSRC). The step is required for companies seeking to list mainland shares, known as A shares.
The Shenzhen-based company, a spin-off from smartphone and telecommunications-equipment maker Huawei Technologies, was established in 2020 with a registered capital of 3.24 billion yuan (US$4.50 billion). Since its separation, it has risen to become a formidable rival to its former parent, ranking as the fourth-largest smartphone maker in the mainland market in 2024, according to market researcher Canalys鈥 2024 report.
The listing move comes amid signs of a recovery in the A-share market in the second quarter after a slow start to the year, according to global consultancy firm Deloitte.
In June, the CSRC unveiled a policy package including support for public listings by high-quality, innovative companies that have yet to turn a profit, which was expected to revive the lacklustre performance of A-share market, Deloitte said on June 19.
鈥淲e are pleased to see more activity in the A-share market鈥 in the second quarter and first half overall, said Dick Kay, national leader of the capital market services group at Deloitte. 鈥淭his demonstrates the success of regulators鈥 efforts to restore market confidence and improve the quality of IPO candidates and issuers.鈥
Chinese onshore stock exchanges were expected to raise 37.1 billion yuan through 50 IPOs in the first half of this year, up from 32.5 billion yuan a year earlier, Deloitte said. The Shenzhen exchange was expected to host 26 listings raising around 15 billion yuan in the first half, it added.
Citic Securities serves as Honor鈥檚 IPO sponsor. The controlling shareholder, state-owned firm Shenzhen Zhixin New Information Technology, holds a 49.55 per cent stake in the company, according to its filing with the CSRC. Wu Hui, who held multiple positions in municipal governments as a Communist Party member, serves as Honor鈥檚 legal representative, steering its capital market strategy and IPO process.
Honor announced its public fundraising plans in November 2023 following a series of moves to expand its shareholder roster to include major industry players. China Mobile, China Telecom, a fund under CICC Capital and an affiliate of China Reform Holdings are among its more than 20 shareholders.
The latest shareholding reform, completed in December, transitioned Honor into a joint-stock company 鈥 a regulatory requirement for public offerings in China and a milestone in the company鈥檚 IPO journey. In January, the company replaced its CEO and reshuffled other management positions.
Only a few Chinese smartphone brands have gone public. Xiaomi, which listed on the Hong Kong stock exchange in 2018, is the most prominent. ZTE is listed in Shenzhen. Huawei remains private.