CRRC 暴跌 +Horizon 割 naive investor，Longpan Technology、Huahao Zhongtian Medicine B subscription plan sharing!

1. IPO subscription not speculation, hard to earn money beyond your knowledge

Today is the second day of the listing of $CR BEVERAGE(02460.HK), and it closed with a sharp drop of 9.6%, with the intraday maximum decline once reaching -11%.

Another new stock, Dark Horse Horizon Robotics $HORIZONROBOT-W(09660.HK), opened with a maximum increase of 36.6% but then fell steadily to close with only a 2.76% increase, almost breaking the issue price.

From the cases of CR Beverage and Horizon Robotics, Brother Cai will once again emphasize two important rules of IPO subscription for everyone.

First, IPO subscription not speculation

Most subscribers of CR Beverage and Horizon Robotics probably made money.

An important rule for IPO subscription in Hong Kong stocks is to sell all shares during the gray market or on the first day. Holding beyond that falls into the realm of speculation.

For CR Beverage, selling during the gray market or on the first day would yield small profits, while selling Horizon Robotics during the gray market would bring substantial gains.

However, those who didn’t sell or chased the rising trend afterward are speculators, and most of them suffered significant losses.

Especially for Horizon Robotics today, after the opening surge, many retail investors chased the rise, buying a total of 12.02 million shares, directly becoming the top buyer.

Second, speculation should earn money within your knowledge

To put it nicely, it’s speculation; to put it bluntly, it’s like chasing meme stocks or concept stocks.

Money beyond your knowledge is hard to earn.

Today, CR Beverage plummeted nearly 10%. Brother Cai previously stated: CR Beverage has no moat, weak growth potential, and is completely overshadowed by Nongfu Spring. Its reasonable valuation is a 30% discount to Nongfu Spring.

CR Beverage gained a unique emotional premium on the first day as a new stock. By the second day, its true nature was exposed.

Brother Cai predicts that, in the long run, CR Beverage will continue to fall until it reaches a 30% discount to Nongfu Spring’s valuation.

The other new stock, Horizon Robotics, is a different case.

Due to the dominance of Nongfu Spring $NONGFU SPRING(09633.HK), CR Beverage will struggle to increase its valuation.

Horizon Robotics, however, is an imaginative stock. In a bull market, it could potentially double.

But in the current market, which is neither bullish nor bearish for IPOs, valuation is the most important factor.

Brother Cai also mentioned earlier: Horizon Robotics’ high PS ratio of 30x is unsustainable in this market.

In summary, for CR Beverage and Horizon Robotics, the short-term premium due to IPO sentiment should be taken advantage of promptly.

Some may argue that CR Beverage’s institutional placement was 25x oversubscribed, and Horizon Robotics’ was 13x, indicating strong institutional recognition, so holding long-term should be profitable.

Well, let’s take Nongfu Spring as an example.

Nongfu Spring’s institutional placement was extremely hot, oversubscribed nearly 60x. What happened to this stock that institutions scrambled for in the long run?

As shown, Nongfu Spring listed in September 2020. Four years later, its stock price has returned to the IPO issue price.

Four years later, it’s all for nothing!!!

This is Nongfu Spring with a 60x oversubscribed institutional placement, and Nongfu is indeed outstanding, with an ROE even higher than Kweichow Moutai. It’s practically the "king" of Hong Kong consumer stocks.

CR Beverage, with no moat and a 25x oversubscribed placement, and Horizon Robotics at 13x, would likely perform much worse if held long-term!

Remember the two principles: IPO subscription not speculation, hard to earn money beyond your knowledge.

Currently, three new stocks are still open for subscription: Longpan Technology, Huahao Zhongtian Medicine, and T.S. Lines.

2. Longpan Technology$LOPAL TECH(02465.HK)

① Discount rate analysis:

Brother Cai mentioned two days ago that he might subscribe to Longpan Technology, depending on its A-share performance.

After two days, Longpan Technology’s discount rate relative to A-shares can be divided into three scenarios:

If priced at the lower limit, the discount rate is 53%.

If priced in the middle, the discount rate is 40%.

If priced at the upper limit, the discount rate is only 27%.

To assess this discount rate (or valuation), we need to refer to peers.

Longpan Technology is a lithium iron phosphate cathode material manufacturer. There are no A+H dual-listed peers, but there are several companies in the cathode material industry chain.

At the time of writing, Ganfeng Lithium’s H-share discount is 41.3%, Tianqi Lithium’s H-share discount is 34%, Zijin Mining’s H-share discount is 11.5%, and Jiangxi Copper’s discount is 42.5%.

② Longpan Technology subscription plan

From the discount rates of these industry peers:

If Longpan Technology is priced at the lower limit, it’s likely to yield profits; mid-range pricing may result in small gains or losses; upper-limit pricing would likely lead to losses.

Given that Longpan Technology’s public subscription is likely below 15x, it will most likely be priced at the lower limit, possibly mid-range, but upper-limit pricing is now unlikely.

Given this, the probability of lower-limit pricing is high, so Brother Cai has already subscribed.

However, it’s worth noting that Longpan Technology should only be lightly subscribed. Brother Cai only subscribed for 20 lots.

The reason for not going all-in is to guard against management greed, which could lead to upper-limit pricing and disaster!

3. Huahao Zhongtian Medicine-B$BIOSTAR PHARM-B(02563.HK)

① Huahao Zhongtian Medicine

There’s not much to analyze for "B" biotech stocks—they are all loss-making listings with weak fundamentals.

Brother Cai has made money on all previous "B" biotech IPO subscriptions.

In Brother Cai’s IPO subscription system, new stocks are categorized into three types:

High-certainty IPOs, gambling IPOs (bets), and arbitrage IPOs. The subscription strategies differ for each type.

High-certainty IPOs should be heavily subscribed or even all-in, such as the previous IPO, Karat.

Gambling IPOs (bets) are mostly skipped, with only a few lightly subscribed.

Arbitrage IPOs are subscribed based on valuation discounts, such as the previous arbitrage IPO, CR Group.

These "B" biotech stocks are clearly gambling IPOs.

② Huahao Zhongtian Medicine subscription plan

Since it’s a gambling IPO, either skip it or subscribe lightly.

Whether to subscribe to "B" biotech stocks depends on two points: first, the trend of "B" stocks; second, the market must not be overheated.

First, "B" stocks have not broken their issue price on the first day for 16 consecutive months.

Second, Huahao Zhongtian Medicine’s public subscription is currently 3x oversubscribed.

In summary, as long as the public subscription does not exceed 50x, Brother Cai will subscribe.

Currently, 100 lots have been subscribed. If signs of exceeding 50x appear, the subscription will be canceled!

Finally, there’s T.S. Lines $TS LINES(02510.HK), which just opened for subscription today. Brother Cai hasn’t had time to analyze it yet and will share insights later!

That’s all for today’s analysis. I hope this article was helpful. I’m Read Financial Reports & Discuss New Stocks, an ordinary investor who enjoys reading financial reports, specializes in Hong Kong IPO subscriptions, and invests in Hong Kong, U.S., and A-shares with a long-term focus and short-term supplements. See you next time!