The Hong Kong stock market will see four new listings simultaneously on Tuesday with a gray market battle commencing today after the close, involving Deepexi Technology, Bama Tea, Sany Heavy Industry, and CIG Shanghai.
Deepexi reportedly saw its public offering oversubscribed by about 7,590 times, making it the historical "Oversubscription King" on the main board and the most anticipated among investors.
Regarding the gray market performance, Kenny Wen Kit, a director of the Hong Kong Institute of Financial Analysts and Professional Commentators, said he is paying more attention to Deepexi and Bama Tea.
Wen believes the former has greater potential for gains, primarily because it is an artificial intelligence solutions provider, with the market dubbing it the "Chinese Palantir." Although it reported losses in 2024 due to preferred shares and associates, in a positive market sentiment, growth stocks like this have more room for imagination, he added.
In contrast, while Bama Tea is already profitable, its business growth is limited. Coupled with a slowdown in revenue for the first half of 2025, it has less potential upside. However, Wen cautioned that both stocks carry high valuations, and given the current market mood, cheap entry opportunities are unlikely. Therefore, he recommends only short-term positioning in these new listings.
Since the reform of initial public offering rules, only Fibocom Wireless (0638) has fallen below its issue price on its first day of trading under Mechanism B with no clawback. Thus, new stocks using Mechanism B are generally viewed more favorably than those using Mechanism A.
Among the four new listings, only Deepexi uses Mechanism A. However, Kenny Ng Lai-yin, a securities strategist at Everbright Securities International, believes that while Mechanism A is theoretically inferior, Deepexi's extremely high subscription multiple means the allocation rate remains low even with a 20 percent clawback, so he expects its overall performance won't be too poor.
Regarding investment strategy, Wen suggests that successful applicants plan to sell during the gray market session or on the first or second listing day. Those who weren't allocated shares should not chase the price post-listing, as a significant surge would further inflate valuations, while a sharp drop might indicate fundamental problems. He emphasized keeping new stock investments separate from the secondary market, viewing IPOs as suitable only for short-term speculation, while investment analysis should focus on the secondary market.
Ng shares a similar view. He recommends taking short-term profits if any of the new stocks show decent gains on their debut, and only considering long-term holding after the price stabilizes. Judging by industry prospects and earnings growth potential, Ng said Deepexi is the only one worth long-term attention among the four due to its close ties to AI business and rapid recent performance growth. As for Bama Tea, Sany Heavy Industry, and CIG Shanghai, their growth advantages have not been pronounced in recent years, making them unsuitable for long-term holding for now, Ng added.
