Chinese Edge AI Cloud Firm Falls 15% in Hong Kong Debut

Dow Jones06-14

By Kimberley Kao

Shares of a Chinese cloud company fell in their Hong Kong debut, reflecting a mixed picture on the risk appetite and IPO market in the Asian financial hub.

Cloud Factory Technology, a company offering edge computing and AI application solutions, slid as much as 15% to HK$3.90 in Hong Kong on Friday. That compared with its initial public offering price of HK$5.60.

Edge AI involves the use of algorithms and machine learning models on devices like sensors and smartphones.

The company raised HK$336.50 million in net proceeds, far less than other Hong Kong IPOs so far this year, such as tea shop giant Sichuan Baicha Baidao Industrial and Chinese lidar maker RoboSense Technology.

Cloud Factory's sole sponsor was SPDB International, the offshore investment banking arm of Shanghai Pudong Development Bank, a lender owned by the Shanghai municipal government.

The Wuxi-based tech company, founded in 2015, deploys edge cloud computing under its brand called Lingjing Cloud, providing services to help data-center supply chains and provide AI capabilities to businesses. Total revenue stood at CNY695.9 million (US$96 million) last year, according to the company, with net profit at CNY13.9 million.

Another edge cloud company, Baishan Cloud, also applied late last year to list on the Hong Kong Stock Exchange.

Falling stock prices, China's sputtering economic recovery and geopolitical tensions have put foreign investors off Hong Kong IPOs, a second home to some of China's biggest companies, including Alibaba and Tencent.

Meanwhile, Chinese companies have upped the ante amid the country's AI race with the U.S., with the likes of Baidu, Alibaba and Tencent launching their own AI chatbots.

The U.S. has been tightening restrictions on China's ability to buy advanced semiconductors, especially AI chips, over concerns about their use in cyber warfare, espionage and military development. Such chips are also crucial for training AI models and operating data centers. Chinese tech companies in recent years have accelerated research efforts to develop cutting-edge AI without relying on American chips.

Write to Kimberley Kao at kimberley.kao@wsj.com

(END) Dow Jones Newswires

June 14, 2024 00:47 ET (04:47 GMT)

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Chinese Edge AI Cloud Firm Falls 15% in Hong Kong Debut

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