In September, Midea Group (00300) raised 35.7 billion yuan, making it the largest IPO for Hong Kong stocks since February 2021, the largest in Asia in the first three quarters of 2024, and the second largest in the world in 2024.
Bonnie Chan Yi-ting, CEO of the Hong Kong Stock Exchange Group, said, “Recently, the Hong Kong Stock Exchange welcomed the largest IPO in Asia and the second largest in the world this year. Refinancing activities are also very active, showing the depth and appeal of our market. The number of IPO applications has further strengthened Hong Kong's position as Asia's preferred IPO capital raising center. Furthermore, Alibaba's transition to a dual primary listing and subsequent inclusion in the Hong Kong Stock Connect also reflects how the dual primary listing structure helps companies effectively access mainland China's capital pool, thereby increasing liquidity.”
At the same time, as stimulus policies were intensified, market activity increased, and the popularity of Hong Kong stock IPOs also began to pick up. Entering October, a total of 8 companies successfully landed on the main board of the Hong Kong Stock Exchange, covering various fields such as medical technology, smart devices, food and beverage. In particular, two companies, China Resources Drinks and Carrot, attracted widespread market attention because they each frozen more than 100 billion yuan in capital, which also highlighted signs that the Hong Kong stock IPO market continues to pick up.
October fundraising king - Horizon Robotics
In recent years, the country has strongly supported the development of smart driving. Coupled with the impetus of AI, the automobile industry has entered the era of a big wave of smart driving.
As a leading company in smart driving technology, Horizon Robotics's listing attracted widespread attention. Backed by Baidu and Ali, it won the title of capital raising king in October with an advantage of about 0.4 billion yuan.
According to a recent research report by Guojin Securities, the Horizon Robotics business is similar to companies such as Nvidia, Mobileye, Black Sesame, etc., involving chip design or autonomous driving solutions. As an industry leader, the smart driving chip market is rapidly exploding and there is a clear trend of domestic substitution. It was given 11 times PS in 2025, with a target price of 4.7 HKD for the first time, with a “gain” rating.
On the financial side, the company's revenue from 2021 to 2023 was 0.467 billion yuan, 0.906 billion yuan, and 1,552 billion yuan, respectively, with a compound annual growth rate of 82.3%. As for the first half of 2024, revenue reached 0.935 billion yuan, an increase of 1.52 times over the previous year, exceeding the revenue for the full year of 2022. Overall, the company is in a phase of rapid expansion.
However, unlike the impressive performance on the revenue side, the company still faces major challenges on the profit side. Net losses from 2021 to 2023 were 2.064 billion yuan, 8.72 billion yuan, and 6.739 billion yuan. Losses in the first half of 2024 reached 5.098 billion yuan, an increase of 1.7 times over the previous year.
On the other hand, Horizon also faces the risk of high customer concentration. According to the prospectus, from 2021 to 2023, the company's five major customers generated total annual revenue of 0.283 billion yuan, 0.482 billion yuan, and 1.067 billion yuan, accounting for 60.7%, 53.2%, and 68.8% of the company's revenue. In the first half of 2024, the ratio was as high as 77.9%.
In addition to the recent US announcement banning investment in the semiconductor, AI, and quantum fields in China, the future of Horizon Robotics still needs further observation.
Source: Hong Kong Stock Exchange; Jinwu Financial News
October Super Buyer—Carrot
Carrot is the first new stock in October after the Midea Group, and the market's expectations for it are at an all-time high. The subscription ratio of 1347.27 times made it the third new stock to be overbought by more than 1,000 times this year after Youbo Holdings and METASURFACE. It is also the highest number of subscriptions listed on the Main Board this year.
According to reports, Carot was founded in 2007. Before becoming a brand, Carot mainly provided OEM services for the international market. In 2013, Carrot first transformed into ODM. The business changed from OEM to designing and developing new products for international brands, and even customized business. At the beginning of 2022, Carrot divested its production business and switched to a fully outsourced and asset-light model. Since then, Carrot has upgraded from a traditional production plant at the bottom of the industrial chain to a brand at the top of the industrial chain and integrating industry resources.
According to the prospectus, according to the Insight Consulting report, based on retail sales in 2023, Carrot ranked in the top five in the online cookware industry in all major markets, fourth in China, second in the US, third in Western Europe, second in Southeast Asia, and third in Japan.
As can be seen from this ranking, the company has a high share of overseas markets. Therefore, it will also rely heavily on channels such as Amazon and Walmart. It is worth noting that in 2021-2023, the company's online channel sales revenue accounted for 98.1%, 98.6%, and more than 99.9% of the total brand business revenue, respectively.
Online channels require high commissions to be paid to e-commerce platforms, which has eroded profit margins to a certain extent. Furthermore, excessive reliance on online channels can cause brands to lose strategic initiative, and there are many hidden risks. Examples include frequent blocking incidents on Amazon, such as “214 blocks” in 2018, “525 blocks” in 2019, “opening year bans” in 2020, and the wave of blocking in 2021.
Source: Hong Kong Stock Exchange; Jinwu Financial News
October was the hardest to win - Taimei Medical Technology
According to the placement results, the first-hand Carrot needed to subscribe for 80 lots, but the first-hand winning rate was 15%. Taimei Medical Technology's first-hand winning rate was less than 2.69%, making it the hardest to win in October.
According to reports, Taimei Medical Technology is a digital solution provider in the life sciences sector invested by many star institutions such as Tencent and Jingwei Venture Capital to design and provide industry-specific software and digital services to accelerate research, development, and marketing of medical science products such as innovative drugs and medical devices.
Taimei Healthcare's path to market has not been smooth. The company submitted a prospectus to the Science and Technology Innovation Board in December 2021, but the IPO failed to pass the March 2023 IPO. At the time, the Listing Review Committee determined that during the reporting period, Taimei Technology mainly relied on core technology to carry out production and operation, did not fully disclose important information to help investors make value judgments and investment decisions, and did not comply with the relevant provisions of sections 3 and 34 of the “Administrative Measures on Initial Public Offering of Shares”. The company then chose to switch to Hong Kong stocks.
From a financial perspective, in the first three months of 2021, 2022, 2023, and 2024, the company's revenue was approximately RMB 0.466 billion, RMB 0.549 billion, RMB 0.573 billion, and RMB 0.132 billion, respectively. At the same time, the company's year-round losses correspond to net losses of 0.48 billion yuan, 0.423 billion yuan, 0.356 billion yuan and 0.12 billion yuan during the same period.
As mentioned in the prospectus, losses are mainly due to the rapid development of the company's various businesses. The resulting sharp increase in wages, remuneration and share payments due to personnel expansion. Combined with the increase in various expenses related to business development, operating income was unable to cover the increase in main business costs and period expenses, which ultimately led to a large loss in the company's net profit during the reporting period.
In terms of shareholder background, prior to the IPO, Taimei Medical Technology went through 8 rounds of financing, with a cumulative amount exceeding 3 billion yuan. Investors include Yunfeng Fund, SoftBank, Gao Lin, etc. Tencent Holdings indirectly held 12.06% of Taimei Technology's shares through Linzhi Tencent and Suzhou Paiyi, making it the company's second largest shareholder.
Overall, the luxurious shareholder lineup shows its position and development potential in the digital healthcare sector, but visibility in terms of cost control and increased profitability is still low. Judging from the company's current business development, there is still a long way to go.
Source: Hong Kong Stock Exchange; Jinwu Financial News
Best performer on the first day of listing in October-Carrot
Market sentiment against Carot continued until the first day of its listing. On October 2, it was listed at HK$9.5 on the first day, which was 64.36% higher than the offer price, and finally closed at HK$9.15, which is still 58.3% higher than the offer price. The maximum daily maximum is HK$10.88. If you leave the market at a high level, without handling fees, 500 shares per lot, the maximum first-hand book profit is HK$2,550.
“Some are happy, others are sad.” Qiniu Smart, which is supported by Alibaba, went public on the first day. It launched HK$1.6 on the same day, 41.82% lower than the offering price, and closed at HK$1.19, which was 56.73% lower than the offering price.
Taimei Medical Technology, which is also in the software service industry, also performed poorly. The first listing closed at HK$9.2 on the same day, 29.23% lower than the offering price. Looking at recent industry performance, the performance of Qiniu Intelligence and Taimei Medical Technology is at the bottom.
Source: Hong Kong Stock Exchange; Jinwu Financial News
Source: Hong Kong Stock Exchange; Jinwu Financial News
China Resources Drinks may be the “Frozen King” of adulthood
Incidentally, since October, two successive IPOs have challenged the title of “Frozen Capital” this year.
Carrot's “frozen capital” of HK$101.05 billion went public on October 2. At the time, the market thought it would be the biggest of the year, but it only sat in this position for about 20 days. China Resources Drinks, the parent company of Packaged Water Yibao, which was listed on October 23, won the title of “Frozen Capital” this year with a frozen capital of HK$132.39 billion.
China Resources Drinks owns 13 brands including “Yibao”, “Extreme Clean Water”, and “Honey Water Series”, and 56 SKUs. However, China Resources Drinks' current revenue is still supported by “Yibao”. From 2021 to 2023 and the first four months of 2024, revenue from packaged drinking water products was 10.818 billion yuan, 11.906 billion yuan, 12.447 billion yuan, and 3,721 billion yuan, respectively, accounting for 95.4%, 94.3%, 92.1% and 89.7%, respectively.
Relying heavily on a single product has major disadvantages. Therefore, in recent years, the company has also continued to develop a diversified strategic layout. As can be seen, the share of beverage products and revenue increased from 4.6% in 2021 to 7.9% in 2023. In the first half of 2024, that share surpassed 10%.
Source: China Resources Beverage Prospectus
Galaxy Securities said that after retrading beverage and dairy giants such as Nongfu Spring and Yili Co., Ltd., the bank found that it is expected to achieve outstanding performance at this stage of moving from being driven by a single product to a platform-based company. The bank believes that China Resources Drinks is currently in this critical period and deserves close attention.
The “battlefield” of packaged water has been extremely intense in recent years. If we want to break through the scuffle with Nongfu Spring, Baisui Mountain, Wahaha, and Master Kong, we are very dependent on listing financing. More than 70% of the capital raised this time was used to expand and strengthen the brand, and the need for its listing became apparent.
List of October submissions
Source: Hong Kong Stock Exchange; Jinwu Financial News
