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The Hong Kong IPO market has been buzzing lately, especially with the remarkable entries of Jiangsu Hengrui Pharmaceuticals and Mirxes in 2025. These initial public offerings not only raised significant capital but also indicated a notable shift in investor attitudes towards China’s burgeoning healthcare sector. After a period of uncertainty, there seems to be a renewed enthusiasm for high-quality assets, particularly those that promise sustainable growth and a solid competitive edge. Let’s take a closer look at these two companies and the broader implications for investors.
The case for Hengrui: An R&D powerhouse
Jiangsu Hengrui Pharmaceuticals made quite the splash with its IPO, pricing at the upper limit of its HK$41.45–HK$44.05 range and successfully raising around HK$9.89 billion (about US$1.27 billion). This robust fundraising effort attracted cornerstone investors such as Singapore’s GIC and Invesco, reflecting a strong institutional confidence in Hengrui’s R&D-centric growth strategy. Although the specific oversubscription rate wasn’t disclosed, the sheer volume of cornerstone commitments—totaling US$533 million—speaks volumes.
With a post-IPO market capitalization of HK$273.7 billion (US$35.6 billion), Hengrui’s valuation comes with a P/E ratio of 49.87. While this is significantly higher than peers like CATL, which is expected to have a P/E of 18x in 2024, the high valuation is often justified by Hengrui’s profitability and promising pipeline. In 2024, Hengrui reported a staggering 47.3% increase in net profit, reaching RMB6.34 billion, alongside a 22.6% boost in revenue to RMB72.0 billion. Its impressive net margin of 23.4% and return on equity of 14% outshine many of its competitors who are still investing heavily in clinical trials without yet generating profits.
Mirxes: Innovation in early cancer detection
On the other side of the spectrum, Mirxes, a biotech company focused on early cancer detection through innovative liquid biopsy technology, saw its listing oversubscribed by over 15 times, raising HK$1.09 billion. This technology, which allows for cancer detection via blood tests, positions Mirxes within a rapidly expanding market projected to grow at a 15% compound annual growth rate (CAGR) through 2030.
The strong oversubscription reflects not only retail but also institutional demand, highlighting investor excitement for a company that holds a first-mover advantage in a field where late-stage detection remains the norm. Although Mirxes’ valuation is still maturing compared to Hengrui, its strategic collaborations with prominent Chinese hospitals and pharmaceutical companies pave a promising path to commercialization. Mirxes’ focus on non-invasive, cost-effective diagnostics aligns well with the broader objectives of reducing healthcare expenses in China, offering a nice complement to Hengrui’s expansive pharmaceutical portfolio.
Contextual tailwinds favoring Chinese healthcare
The timing of these IPOs resonates with three significant macro trends. First, regulatory changes in Hong Kong have eased the path for biotech firms to access capital, allowing even unprofitable companies to list. Second, a recent truce in U.S.-China tariffs has alleviated some supply chain concerns, enhancing the allure of Asian manufacturers among investors. Finally, with China’s elderly population projected to reach 2.67 billion by 2035, there is an undeniable surge in demand for chronic disease management and diagnostic tools.
Notably, CATL’s own oversubscribed listing in 2025 further underscores growing investor risk appetite, even amid geopolitical tensions. The market’s readiness to invest at premium valuations for companies boasting defensible intellectual property and scalable business models is a clear indication of shifting sentiments.
Understanding the risks involved
However, prospective investors should approach these high valuations with caution. Hengrui’s demanding P/E ratio of 50x necessitates flawless execution of its ambitious R&D pipeline. Meanwhile, Mirxes must validate its technology’s clinical utility on a larger scale to maintain investor confidence. Ongoing geopolitical uncertainties and potential regulatory shifts, such as drug price controls, could also impact profitability margins. It’s crucial for investors to keep an eye on pivotal developments, like FDA approvals for Hengrui’s oncology drugs or potential partnerships for Mirxes with global diagnostics firms.
Investment outlook: A selective approach
For long-term investors, both Hengrui and Mirxes present enticing opportunities, albeit with a selective strategy. Hengrui might be a good buy if it dips to around HK$40 per share, which is about a 10% discount from its IPO price. The target for this stock could range between HK$60 and HK$70 by 2027 as its product pipeline matures. On the other hand, Mirxes offers a chance to accumulate shares during periods of volatility, with a focus on the next 12 to 18 months to see clinical validation of its liquid biopsy platform.
Both companies are well-positioned to benefit from a broader trend: the Chinese healthcare market is expected to expand at an impressive rate of 10% annually through 2030, outpacing GDP growth. Investors may consider coupling these healthcare stocks with other sectors, such as electric vehicle battery manufacturers, to mitigate sector-specific risks.
The recent IPOs of Hengrui and Mirxes aren’t just funding events; they represent pivotal moments in China’s evolving landscape as a leader in biotechnology. For those willing to embrace quality and pay a premium, these opportunities offer a glimpse into the future of healthcare. Timing is critical, and the moment to delve into these investments is now.