[HK IPO] Zhonghui Biotech-B Subscription Strategy
Another pharmaceutical stock with a B suffix is here, but the company is not actually in innovative drugs; it focuses on flu vaccines. Will it be the next WeLixinZhiBo-B? Let's wait and see if it's worth investing in...
1. Basic Information
$AB&B BIO-TECH-B(02627.HK), established in 2015, is committed to the research, development, manufacturing, and commercialization of innovative vaccines and traditional vaccines using new technologies.
Multiple pipelines for viral vaccines, bacterial vaccines, conjugate vaccines, subunit vaccines, and mRNA vaccines are being advanced simultaneously at the Shanghai/Taizhou R&D center and pilot platform.
Currently, the company's quadrivalent influenza subunit vaccine (for ages 3 and above) is already on the market. The NDA application for the quadrivalent influenza subunit vaccine (for ages 6-35 months) has been accepted. The 23-valent pneumococcal polysaccharide vaccine and freeze-dried human rabies vaccine (human diploid cell) have completed Phase I clinical trials.
2. IPO Information
Company Name & Code: Zhonghui Biology-B (02627.HK)
IPO Price: HKD 12.90-15.50
Minimum Investment: HKD 3,131.26 (1 lot = 200 shares)
Subscription Period: July 31 to August 5, closing next Tuesday
Allotment Announcement: August 7
Listing Date: August 8
Shares Offered: 33.4426 million shares, accounting for 8.50% of total shares
Market Cap: HKD 5.075-6.098 billion
Greenshoe: None
Cornerstone Investor: 1 cornerstone investor subscribed to 21.30%
Sponsors: CITIC, CMB.CITIC's sponsorship is a quality guarantee, which is a consensus in the industry. CMB has participated in 7 sponsorship projects this year, with only one (Green Tea) falling below the issue price on the first day...
3. Financials
From 2023 to Q1 2025, Zhonghui Biology's revenue was RMB 52 million, RMB 260 million, and RMB 4.13 million, respectively, with net losses of RMB -425 million, RMB -259 million, and RMB -87 million. R&D expenses accounted for the majority of the losses, at RMB 283 million, RMB 206 million, and RMB 47 million, respectively...
From 2018 to 2021, the company completed three rounds of financing, totaling RMB 995 million. After the 2021 financing, the company's valuation reached RMB 4.189 billion, equivalent to HKD 4.56 billion.
The IPO valuation this time is HKD 5.075-6.098 billion, representing an increase of about 11.2%-33.7% over four years. From this perspective, the company is relatively fair...
Zhonghui Biology has two core products: the quadrivalent influenza subunit vaccine and the in-progress freeze-dried human rabies vaccine.
The flu vaccine was approved by the NMPA in May 2023 for people aged 3 and above, branded as HuiErKangXin. It is currently the first and only quadrivalent influenza subunit vaccine approved in China, with 2024 sales of RMB 290 million.
Additionally, Zhonghui Biology has submitted an NDA for the quadrivalent influenza subunit vaccine for children aged 6-35 months, which was accepted by the NMPA in June 2024 and is expected to be approved in Q3 2025.
Beyond the two core products, Zhonghui Biology's pipeline includes 11 other vaccine candidates covering multiple disease areas with vaccination needs.
4. Subscription Strategy
1. The company's fundamentals are not strong, with losses for three consecutive years. Although it's a B-suffix pharmaceutical stock, it's not in innovative drugs but vaccines. However, its valuation has only increased by 33.7% at the highest IPO price compared to the HKD 4.56 billion valuation four years ago...
2. No greenshoe, one cornerstone investor subscribing to 21%—this feels a bit unsettling...
3. The biggest highlight of Zhonghui Biology's IPO might be the sponsors. CITIC's reputation is now well-established, and even CMB has only seen one project (Green Tea) fall below the issue price on the first day out of seven this year.
4. Overall, Zhonghui Biology's quality is mediocre, but pharmaceutical stocks are currently hot. The margin financing has already reached over 700x, and it might exceed 1,000x? The allotment rate could be as low as 1 lot for every 200 lots subscribed. Er Gou plans to use margin financing in one account and cash subscriptions in others to reduce costs. That's it...
Subscription Rating: 7/10 (9-10: All-in with margin financing; 7-8: Some margin financing; 6: Opportunistic; 5: Skip it)
This is just Er Gou's personal strategy and does not constitute any investment advice....
Follow Er Gou for smooth sailing in HK IPO investments~~
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