(Yicai) March 13 -- Chinese hydrogen energy stocks rallied after the authorities reaffirmed support for listings by unprofitable high-quality technology companies. The confirmation of support could open up new financing channels for hydrogen energy firms, according to market insiders.

Refire Group [HKG: 2570] led the rally, closing up 17.7 percent at HKD248.40 (USD31.96) a share in Hong Kong today. SinoHytec [SHA: 688339] jumped 8.1 percent in Shanghai to end at CNY26.20 (USD3.62), while its Hong Kong-listed stock [HKG: 2402] gave up 12.8 percent to HKD27.55 (USD3.55), after adding 13.1 percent yesterday.

The China Securities Regulatory Commission reiterated in a meeting on March 11 that the authorities need to enhance the listing system’s inclusiveness and adaptability and support initial public offerings by high-quality tech firms that have not yet turned profitable.

Despite long-term optimism for hydrogen energy, the sector faces challenges, such as rapid technological iterations, high investment costs, and no prospect of a quick return. Losses are a common issue for hydrogen energy firms, an investor in renewable energy told Yicai.

As a result, a number of hydrogen energy companies have rushed to IPO in recent years to raise funding and the industry is watching closely to see whether the CSRC’s reaffirmation of support will open up a new financing channels for hydrogen energy players.

Beijing-based SinoHytec was the last to go public in the Chinese mainland, joining the Star Market in 2020. All subsequent IPO attempts by hydrogen energy companies failed, mainly because of their excessive accounts receivable and unsustainable profitability. Others, such as Refire, have managed to list in Hong Kong instead.

The regulator’s latest remarks demonstrate policy continuity rather than new measures, according to Wang Jiyue, a former investment banker. The focus remains on supporting high-quality tech and innovative firms, he added.

Since regulators called for a regular pace of IPOs, based on scientific and rational decision-making, in the summer of 2023 only a few unprofitable businesses have been approved for listing on the Star Market, the Shanghai Stock Exchange’s technology board.

The recent policy easing is largely due to a better market environment and a reduced backlog of IPO review cases, Wang pointed out.

Some 197 companies were under review by the three Chinese mainland stock exchanges as of March 9, compared with 636 a year earlier. For the Star Market, the figure fell to 18 from 96.

Editor: Futura Costaglione