(01:49 GMT) *Jiangxi Institute of Biological Products Shares Open 34% Lower in Hong Kong Debut (01:49 GMT) *Jiangxi Institute Shares Last Trading 19% Lower From IPO Price (03:58 GMT) Jiangxi Institute of Biological Products Drops in Hong Kong Trading Debut
By Jason Chau
Shares of Jiangxi Institute of Biological Products dropped sharply in their first day of trading in Hong Kong, a sign of investor caution over the company's earnings prospects.
The Chinese biopharma company's shares fell as much as 35% from their offering price early Tuesday after raising 405.8 million Hong Kong dollars, equivalent to US$51.8 million. It sold 36.2 million shares at HK$11.20 each in its initial public offering.
The stock was recently 12% lower at HK$9.90.
Jiangxi Institute said it plans to use the IPO proceeds on research and development, and facility and technology upgrades. According to its filing, Jiangxi Institute is the world's largest provider and exporter of human tetanus antitoxins.
While the company enjoyed strong revenue growth in the previous years as demand for human antiserum grew, it expects net profit to decline sharply this year due to lower average selling prices for its tetanus antitoxin products following a tax policy change in China.
Jiangxi Institute said earnings are also projected to decline due to an increase in research-and-development expenses, potentially weaker export sales amid geopolitical tensions, energy price swings and a planned production line renovation scheduled for the second half of the year.
Write to Jason Chau at jason.chau@wsj.com