SERES Faces Market Test in Hong Kong: Shares Open Below Issue Price Despite HK$220 Billion Market Valuation

On November 5, SERES (141.950, -4.08, -2.79%) commenced trading on the Main Board of the Hong Kong Stock Exchange, marking the first dual A+H listing among China’s luxury new-energy vehicle manufacturers. The offering raised a net HK$14.016 billion, and the company’s market capitalization exceeded HK$220 billion on its listing day. SERES characterized the successful listing as the establishment of a new international financing channel to support long‑term development and as a foundation for its global strategic ambitions.

Originating as Sokon in 1986, SERES listed on the Shanghai Stock Exchange in 2016. Reports emerged late last year that the company was preparing a secondary listing in Hong Kong to raise in excess of US$1 billion. Following the initiation of the Hong Kong offering on October 27, investor demand proved strong: the public offering was oversubscribed by 133 times and total subscription amounted to more than HK$170 billion.

Despite strong subscription momentum, SERES’s shares opened below the issue price on the first trading day. By the midday break the stock had declined 2.97% to HK$127.6, and it closed the session at the issue price of HK$131.5.

As a leading brand within the HarmonyOS Smart Mobility ecosystem, AITO has illustrated the commercial benefits of Huawei’s endorsement, yielding significant gains for partners such as SERES. Financial statements show that in the first three quarters of the year SERES reported net profit of ¥5.312 billion, a year‑on‑year increase of 31.56%. However, on a quarterly basis third‑quarter net profit declined 1.74% to ¥2.371 billion while revenue rose 15.75% to ¥48.133 billion, reflecting revenue growth that has not translated proportionally into higher quarterly profit.

SERES’s close commercial ties with Huawei also create concentration risk. Between 2022 and 2024, revenue from the AITO brand represented 60.3%, 67.9% and 90.9% of SERES’s total revenue, respectively. The prospectus warns that any weakening in demand for AITO vehicles, deterioration in the brand’s market performance, or adverse publicity could materially harm SERES’s business, financial condition and results of operations. The company explicitly cautions that it benefits from a long‑standing business relationship with Huawei and that disruption or termination of that partnership could have significant adverse effects.

As Huawei continues to broaden its partner ecosystem and promote Huawei Smart Drive, market dynamics have become more uncertain for AITO. In addition to AITO, HarmonyOS Smart Mobility has incubated brands including Zhijie, Xiangjie, Zunjie and Shangjie, reducing AITO’s exclusive advantage and increasing intra‑ecosystem competition. Industry observers have noted that AITO’s distinct edge is being eroded as more brands within the Huawei ecosystem compete in intelligent driving.

In response to these shifts, SERES is allocating capital to strengthen research and development capabilities while accelerating overseas expansion. Approximately 70% of the proceeds from the Hong Kong IPO are earmarked for R&D, with roughly 20% designated for diversified marketing channels, overseas sales and charging network services.

According to the prospectus, of the R&D allocation, 40% of the targeted funds will support enhancements to core technical and innovation capabilities, including upgrades to the Cube technology platform to improve architecture and performance; advancement of intelligent cockpit and driver‑assistance systems, with increased AI investment over the next two years to raise system intelligence and reliability; and development of key powertrain technologies. SERES reports that its global footprint already covers multiple countries across Europe, the Middle East, the Americas and Africa. Leveraging the dual A+H capital platforms, the company intends to continue driving technological innovation, strengthening brand value and expanding its international market presence.