Event

In 2020, the enthusiasm of Hong Kong stock investors was high, and Oukang Visa (01477), Peijia Medical (09996), NONGFU SPRING CO., LTD. (09633) and other over-subscribed frequently appeared, and the effect of making money was obvious. The average return on the first day of listing of 65 companies was 18 per cent, with the biggest increase of 39 per cent in two weeks.

Viewpoint

Selling on the first day is no longer the best strategy for playing news. the average rate of return of new shares in the consumer and pharmaceutical industries on the first day of listing is 68% and 34%, while the highest rate of return within 14 days can be as high as 105% and 59%. If you can grasp the best selling point, you can greatly increase the new revenue. We have summarized all the new issues of Hong Kong stocks since 2017. excluding the extreme value, there are a total of 328 companies.

We conduct a multiple linear regression analysis of the highest return within 14 days from five dimensions: financial indicators, valuation indicators, issuance indicators, industry attributes and market heat, and find the following relationships:

1. Financial indicators: historical data show that although investors refer to financial indicators when deciding to subscribe, the role of financial indicators is actually negligible for new sellers who are sold at the right time within two weeks. Companies with higher year-on-year growth in net profit and revenue do not mean higher new earnings.

two。 Valuation indicator: if the market capitalization is less than HK $3 billion, the average rate of return is 45%. If the market capitalization is more than HK $3 billion, the average return is less than 30%. In addition, the price-earnings ratio is not an important indicator.

3. Issuance indicators: financing scale, sponsors and cornerstone investors are not important indicators.

4. Industry attribute: the rate of return of the new economy of science and technology is significantly higher than the average. The industries of required consumer goods, information technology, health care and communications services had the highest increases in 14 days, with 66%, 56%, 49% and 43%, respectively. The energy, finance and public utilities sectors lagged behind the highest increase in 14 days, at 17%, 12% and 3%, respectively.

5. The oversubscription multiple explains investors' enthusiasm for the stock and is the most significant indicator of all the indicators in our model. Our model shows that for every 100-fold increase in online subscription multiples, the highest 14-day yield increases by 6.6%. In addition to the enthusiasm of investors for individual stocks, the overall popularity of the market over the past period of time is also closely related to the benefits of playing new companies. There is a significant relationship between the market performance of the past two weeks and the highest yield of individual stocks two weeks after listing. Our model shows that for every 1% increase in the Hang Seng Index's yield in the past two weeks before IPO, the highest yield in Daxin has increased by 2.5%.

Our final regression model contains four factors: oversubscription multiple, market performance 14 days before IPO, whether the market value is less than 3 billion (yes = 1, no = 0), and whether it belongs to the four industries of required consumer goods, information technology, health care and communication services (yes = 1, no = 0). The expected maximum rate of return within 14 days is 23% * whether the market capitalization is less than 3 billion + 0.06% * online subscription multiple + 2.5% * Hang Seng Index's rate of return in the past 10 days + 20% * belongs to the four major industries + 6.5%. The significance of the model is strong, the P value of the four factors is less than 1%, and the F value is more than 10.

Once the expected return is reached, investors can sell new shares. Take NONGFU SPRING CO., LTD. as an example, the actual maximum increase within 14 days is 85%, and the predicted value of the model is 84%. If you reach this value, you can sell, and investors can get the best return.

Our analysis aims to provide a quantitative guide to the selling price of new shares, and does not give advice on whether or not to participate in the innovation: 1. Institutional placement is allocated by investment banks, so it is impossible to estimate the probability of allocation. When the organization participates in the subscription, it is impossible to know the over-subscription multiple on the Internet.

Risk hintHistory does not necessarily repeat itself, and institutions cannot obtain placements