Rate Of Return
Buffett Apprentice[HK IPO Subscription] Huaren Bio + Mingji Hospital Subscription Strategy
1. HuaRen Biotech
HuaRen Biotech is an innovative biopharmaceutical company focused on developing wound healing therapies. The company's core business is centered on the platelet-derived growth factor (PDGF) drug field, with two clinical-stage drug candidates in its pipeline. Among them, Pro-101-1 is the fastest-developing PDGF candidate drug in China for treating burns and scalds.
The company began its IPO on December 12, with an offer price of HK$38.2~51 per share, 200 shares per lot, and a minimum subscription of HK$10,302.88. Its market cap ranges from HK$4.495 billion to HK$6.001 billion, with 17.6488 million shares issued. It belongs to the pharmaceutical industry, has a greenshoe option, but no cornerstone investors.
The sponsors are Huatai Hong Kong and CITIC Securities. Huatai Hong Kong's IPO projects had a first-day gain rate of 48.14% over the past two years, while CITIC Securities' projects had a first-day gain rate of 85.71%. Overall, the sponsors' performance is like pairing the worst student in class with the best.
The company's core products are still in the R&D stage, with the most advanced candidate, Pro-101-1, expected to launch in China in 2027. It has not yet achieved commercialization.
The company's revenue for 2023~2024 was HK$472,000 and HK$261,000, respectively, with a year-on-year decline of 44.7% in 2024. Net profits for 2022~2024 were -HK$85.926 million, -HK$105 million, and -HK$212 million, respectively, with a year-on-year decline of 101.87% in 2024.
At the median offer price, the market cap is HK$5.348 billion, with HK$787 million issued, representing 14.72% of the total. With no cornerstone lock-up, the entire HK$787 million is freely tradable.
The IPO follows Hong Kong's new Mechanism B rules, with an initial public offering allocation of 10% and no clawback mechanism, but it can be reallocated to a maximum of 15%.
The current subscription multiple is 35.38x, and this is only the first day of the IPO. The subscription momentum is already strong, mainly due to recent competition for funds among multiple new listings. The final subscription momentum is expected to be even better.
Subscription Strategy:
HuaRen Biotech is an innovative biopharmaceutical company focused on wound healing therapies. The sponsors are Huatai Hong Kong and CITIC Securities, akin to pairing a top student with a struggling one. The company's core products are still in R&D, with the most advanced candidate expected to launch in China only in 2027. It has not yet achieved commercialization, so the company remains loss-making. This IPO follows Hong Kong's new Mechanism B rules, with an initial public offering allocation of 10% and a freely tradable float of HK$787 million. The current subscription multiple is 35.38x, and the subscription momentum is decent. Innovative drugs have performed well this year, so I plan to allocate some funds to participate!
2. BenQ Medical Center
The company draws on hospital management experience from Taiwan and is a private for-profit general hospital group in mainland China. It currently owns and operates two private for-profit general hospitals. According to Frost & Sullivan, based on 2024 total revenue, it is the largest private for-profit general hospital group in East China, with a 1.0% market share in the region. Nationally, it ranks seventh among private for-profit general hospital groups, with a 0.4% market share in China. In terms of revenue per bed in 2024, it ranks first among all private for-profit general hospital groups in mainland China.
The company began its IPO on December 12, with an offer price of HK$9.34~11.68 per share, 500 shares per lot, and a minimum subscription of HK$5,898.9. Its market cap ranges from HK$2.914 billion to HK$3.644 billion, with 67 million shares issued. It belongs to the medical and aesthetic services industry and has no greenshoe option.
The sponsors are CICC and Citigroup Global Markets. CICC's IPO projects had a first-day gain rate of 58.92% over the past two years, while Citigroup Global Markets' projects had a first-day gain rate of only 25%. The sponsors' overall performance is relatively weak.
There are three cornerstone investors: Herong Technology, Hefu China, and Suzhou Zhanxing Investment. Together, they subscribed to approximately $39.9 million, accounting for 44.1% of the total offering—a relatively high proportion.
The company's revenue for 2023~2024 was HK$2.336 billion, HK$2.688 billion, and HK$2.659 billion, respectively, with a year-on-year decline of 1.07% in 2024. Net profits for 2022~2024 were HK$89.55 million, HK$167 million, and HK$109 million, respectively, with a year-on-year decline of 34.95% in 2024, indicating a performance downturn.
At the median offer price, the market cap is HK$3.279 billion, with HK$704 million issued, representing 21.47% of the total. With cornerstone investors locking up 44.1%, the freely tradable float is HK$394 million.
The IPO follows Hong Kong's new Mechanism B rules, with an initial public offering allocation of 10% and no clawback mechanism, but it can be reallocated to a maximum of 15%.
The current subscription multiple is 1.6x, indicating weak subscription momentum. However, this is only the first day of the IPO, and the final subscription momentum is expected to improve.
Subscription Strategy:
BenQ Medical Center is a private for-profit general hospital group in mainland China, ranking third among private hospitals. The sponsors are CICC and Citigroup Global Markets, with relatively weak performance. Three cornerstone investors subscribed to approximately $39.9 million, accounting for 44.1% of the total offering—a high proportion. The company's net profit declined by 34.95% year-on-year in 2024. With the current economic downturn, even hospitals are seeing performance declines. This IPO follows Hong Kong's new Mechanism B rules, with an initial public offering allocation of 10% and a freely tradable float of HK$394 million. Subscription momentum is weak, and there is no greenshoe option. There have been cases of Mechanism B IPOs breaking issue prices, so blind subscriptions are no longer advisable. Cautious investors should skip this one, while interested investors may consider a small allocation.
My comments represent personal views only and do not constitute investment advice. The stock market carries risks; invest with caution!
Follow me: Retail Investor Lao Yu
$BENQ HOLDING(02581.HK) $B&K CORP-B(02396.HK)
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