In recent years, a noticeable trend has emerged among Chinese companies listed on the A-share market, as many are now considering the issuance of H-sharesThis strategic move is set against a backdrop of supportive government policies, which have encouraged a multitude of firms to adopt the “A+H” dual-listing modelBy facilitating listings on both domestic and international platforms, companies can enhance their financial flexibility and tap into broader capital markets.

A comprehensive analysis reveals that as of the end of 2023, at least seven A-share companies have publicly announced plans to issue H-sharesNotably, December alone has seen significant developments with companies like Heng Rui Medicine and Junsheng Electronics announcing their intentions to list in Hong KongThis follows the successful listings of prominent firms such as Midea Group and SF Express on the Hong Kong Stock Exchange, showcasing a burgeoning trend among industry leaders.

According to Zhang Shujian, the head of the Capital Markets Division at Futeng Capital, the “A+H” model is instrumental in creating a dual listing platform that not only enhances the ability to raise capital but also attracts international institutional investors

This approach ultimately contributes to a more optimized shareholder structureFurthermore, in 2023, numerous exchanges have been rolling out supportive policies aimed at facilitating A-share companies looking to list abroad, further driving the momentum of this “A+H” wave.

Several industry leaders are diving headfirst into this craze for dual listings, leveraging their significant market position to access international capitalFor instance, on the evening of December 9, Heng Rui Medicine announced its plan to issue H-shares and list on the main board of the Hong Kong Stock ExchangeThe company stated that the proceeds—after deducting expenses—would be used for various purposes, including research and development, product commercialization, and general operational expenses.

Extending the timeline to encompass the entirety of 2024, at least seven A-share companies, such as Heng Rui Medicine, Junsheng Electronics, and Anjiyuan Foods, have revealed their planning for H-share issuance, highlighting a rich tapestry of industry leaders eager to expand their footprint abroad.

Junsheng Electronics disclosed on December 7 it aimed to issue H-shares to foster its global development, particularly in the intelligent automotive sector

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The company intends to deepen its “business + capital” integration strategy, creating an international platform that responds to the demands of global investors while enhancing its ability to operate in global capital markets.

Moreover, Anjiyuan Foods, a key player in the frozen food industry, updated its progress towards listing in Hong Kong on December 2. The firm is currently in discussions with various intermediary institutions regarding the issuance of H-shares and has previously announced that this initiative aims to expedite its international strategy while bolstering its offshore financing capabilities.

On November 27, SF Express became the first company in the express logistics industry to successfully list on the Hong Kong Stock Exchange, issuing 170 million H-shares and raising a net capital of approximately 5.6 billion Hong Kong dollars, with each share priced at 34.3 Hong Kong dollars.

In addition to these developments, companies based on the Beijing Stock Exchange are also pursuing listings in Hong Kong

For instance, Kang Le Wei announced on July 10 its plan to issue no more than 108 million shares and seek a listing on the Hong Kong exchange, marking a significant leap toward becoming the first “Beijing + H” company.

Zhang Shujian further emphasizes that the “A+H” model not only increases the flexibility of fundraising but also optimizes the shareholder structure by attracting long-term international investorsA-shares, especially of leading companies, are more easily recognized by Hong Kong investors, thus benefiting from heightened international visibility when they seek capital through H-share listings.

But what drives A-share companies, especially industry leaders, to list in Hong Kong? A closer examination indicates that these firms have often established a strong presence in overseas markets or hold a considerable market share, with clear ambitions for further global expansion.

Take Heng Rui Medicine, for example, which has adopted a dual strategy of “innovation” and “internationalization.” This company positioned internationalization of its products as a top priority, managing to penetrate over 40 countries with its high-end formulations

In the realm of innovative drugs, Heng Rui has accelerated its overseas licensing agreements with foreign companies, achieving eleven such licenses by 2023, which contributed significantly to its foreign revenue of 617 million yuan, a substantial 7.57% year-over-year increase in gross margin.

Similarly, Junsheng Electronics reported that in the first half of 2024, its overseas revenue reached 20.84 billion yuan, accounting for over 70% of its total revenueWith Chinese brands and new automotive enterprises increasingly targeting markets in Europe and Southeast Asia, Junsheng has positioned manufacturing bases and research centers strategically in key automotive production countries worldwide, empowering Chinese automotive firms to expand their global footprint effectively.

This year, the supportive governmental policies promoting the “A+H” model have created an encouraging environment for companies considering dual listings