(CapitalWatch, May 3, Hong Kong) The video platform Bilibili (Nasdaq: BILI; HKEX: 9626) gained approval from the Stock Exchange of Hong Kong to convert its secondary listing into a dual-primary listing on the exchange's main board.
The company said in a Monday exchange filing that the conversion is expected to be completed around Oct. 3 of this year. Bilibili became listed in Hong Kong in March 2021 in a secondary offering. It's been listed on the Nasdaq since 2018.
Bilibili announced its plans to pursue the conversion in March. In the Monday filing, the company said it will need to make a number of internal changes to meet the requirements for the change, as well as get shareholder approval.
The dual-primary listing conversion comes amid rising competition for the platform, and U.S.-listed Chinese companies' risk of being booted from New York as the two nations hash out a compromise for Washington's audit requirements.
The leading video-sharing platform has dominated its field in the past, but it's now seeing rising competition.
As new competitors like Douyin gain steam in the market, Bilibili is losing its longstanding grip on China's Gen Z consumer base. In the fourth quarter of 2021, the company reported net losses amounting to $317 million. In Hong Kong, its stock price has fallen 77% since its listing.
The dual-primary listing could give Bilibili more opportunities to recover some growth and profit. With the new listing style, Bilibili could potentially be included in Stock Connect schemes. These are a mutual market access mechanism that allows mainland Chinese investors to trade Hong Kong stocks.
Bilibili is among a trend of Chinese companies putting down stronger roots at home as audit talks progress, but remain tenuous.
This year, the U.S. Securities and Exchange Commission started enforcing the 2020 Holding Foreign Companies Accountable Act, requiring foreign companies listed in the U.S. to disclose whether they are owned or controlled by a government entity. The act applies to all foreign companies, but the regulations are explicitly geared toward China.
Late last year, the SEC said over 200 registrants could be identified, and has been explicitly naming major Chinese companies since.
Beijing has been hesitant to allow companies that may hold sensitive data to comply with the new laws. But as the delisting threats increase, the countries are discussing ways to allow firms to comply. Chinese regulators seem optimistic about an incoming resolution, but investors are still skeptical.
As waves of Chinese tech selloffs and threats of delisting loom overseas, companies are seeking contingencies in Hong Kong. The move would give Bilibili's shares more stability in the event the company gets caught in the crosshairs of the audit wars.
Bilibili's share price rose 13% Friday to close at $25.94, but it's back down 5.7% today, trading at $24.47. The Stock Exchange of Hong Kong was closed on Monday due to a public holiday.