SHARES of Bloks Group, the popular Chinese maker of Ultraman and Transformers figurines, jumped as much as 82 per cent in their Hong Kong trading debut after the company’s US$215 million initial public offering (IPO) drew overwhelming demand from individual investors.
Shanghai-based Bloks opened at HK$109.60 each, compared with its initial share sale price of HK$60.35. It pared some of those gains later, trading at HK$88.05, up 46 per cent, at 11.30 am.
The frenzy over Bloks – demand from mom-and-pop investors was thousands of times higher than the number of shares reserved for them – builds on the popularity of Chinese toy companies lately. Pop Mart International Group, which counts Blackpink’s Lisa as a fan of its PUCKY Roly Poly Kitty toys, quadrupled last year.
“There is certainly a positive halo around the games and general entertainment space,” Benjamin Harburg, managing partner at Magic Stone Alternative Investment, said of the demand for Bloks shares. “While Chinese appetite for high-end retail continues to decline, lower ticket mass-market items are doing well across verticals.”
As for Bloks, demand was also helped by an abundance of zero-interest loans made available for the purchase of the stock. Individuals sought around HK$879 billion (S$155 billion) in margin financing to participate in the IPO, reflecting around 6,000 times the number of shares initially set aside for them. The excess demand was greater than last month’s blockbuster IPO from Mao Geping Cosmetics.
The demand prompted the company to increase the number of shares it sold and allowed it to price the stock at the top of its marketed range, resulting in Bloks raising HK$1.67 billion. That also helped turn Zhu Weisong, who’s chairman and chief executive officer, into a billionaire, according to the Bloomberg Billionaires Index.
Still, Bloks relies more on licensing superheroes such as Ultraman than Pop Mart, which may limit the stock’s upside, according to Nelson Yan, co-chief investment officer at Fosun Wealth International in Hong Kong. Bloks is more of a short-term opportunity rather than a long-term value investment, he said.
Founded in 2014 with a focus on Lego-like building blocks, the company jumped into figurines in 2022, with the majority of its revenue coming from the latter business now. Despite of rapid growth in revenue in recent years, Bloks has been unprofitable since at least 2021, according to its prospectus.
After raising more than US$11 billion in 2024, dealmakers are expecting Hong Kong IPOs to continue going up this year. First-time share sales that raised US$100 million to US$500 million in the city saw an average 12 per cent gain on their debuts, though they reversed to an 8.5 per cent decline after a month of trading, according to data compiled by Bloomberg. BLOOMBERG
