HK IPO: Jiachen International Resources Listing Analysis and Subscription Plan
Jiaxin International Resource Investment Co., Ltd. is a mining company focused on tungsten mining and processing. Its core business is developing the Bakuta Tungsten Project in Kazakhstan. The project has the world's largest open-pit tungsten resources (as of the end of 2024 data), with the main product being tungsten concentrate containing 65% tungsten trioxide (WO₃). The plan is to gradually increase production capacity through two stages of commercialization: 1. Phase I production (starting in April 2025): annual ore processing of 3.3 million tons; 2. Phase II production (targeted for 2027): integrating ore sorting systems, increasing annual capacity to 4.95 million tons, and planning to build a deep processing plant to produce high value-added products (such as ammonium paratungstate APT and tungsten carbide WC).
The net proceeds from this global offering, approximately HKD 1.088 billion, will mainly be used for the development of the Bakuta Tungsten Project (55%), the development of ammonium paratungstate capacity (10%), repayment of bank loan principal and interest (25%), and replenishment of working capital (10%).
Company issuance information and subscription rate?
The number of shares in this global offering is 109.8088 million shares, with 400 shares per lot. As of the time of publication, it was oversubscribed by 14.77 times, adopting the new regulation mechanism B, with 13,726.1 lots in both A and B groups. Although it is relatively more than the previous few stocks, it is still less. If following the Red Shoe mechanism, the one-lot subscription rate is about 5%. Given the current enthusiasm, it is relatively weaker than the others, mainly because the old Deng is ending, and the margin will definitely go up later. The A group is still a national lottery, with a tail subscription rate of 60-70%. The B group is stable with one lot in four tiers!
What is the industry outlook and competitive landscape of the company?
The global tungsten mining industry is showing a steady growth trend, especially with strong demand for high-end tungsten products (such as hard alloys). China, as the leading producer (accounting for over 80% of global production), is expected to have a compound annual growth rate of 3.4% in consumption from 2024 to 2029. However, export restriction policies create opportunities for resource countries like Kazakhstan. The competitive landscape is concentrated between Chinese and international producers, with key competitive factors including resource reserve size (such as the company's Bakuta Tungsten Mine leading with the world's fourth-largest WO₃ resource of 227.3 thousand tons), cost efficiency (target cash cost of RMB 122 per ton of ore), and deep processing capabilities. The company relies on the design capacity advantages of open-pit mines and the location convenience of Kazakhstan, making it more competitive in terms of resources and costs compared to competitors., compared to competitors, it has more resource and cost competitiveness.
The global major companies ranked by mine resource volume are: Xiamen Tungsten > Minmetals Development > BCN > Jiaxin International Resources > NCF. Based on the mineral resources owned by Jiaxin International Resources, it is roughly estimated to be worth RMB 5-6 billion, and the issuance valuation is considered reasonable.
What is the company's financial status?
Due to the development and construction period of the Bakuta Tungsten Project, the company has had no operating income for three consecutive years, with main expenses being administrative expenses and loan interest. In 2025, it generated HKD 126 million in revenue, with net loss narrowing to HKD 16.807 million, compared to a net loss of HKD 59.254 million in the same period last year. Profitability will gradually recover after capacity release.
As of the end of June 2025, the balance of cash and cash equivalents at the end of the period was HKD 33 million, a decrease of HKD 140 million compared to the same period last year. Overall cash flow is tight, and the funds raised this time will effectively alleviate the company's cash flow pressure. Future financial health will highly depend on the IPO financing effectiveness and capacity ramp-up efficiency. This type of mineral asset, with revenue already breaking the ice, having a mine at home is not a concern.
What about the company's historical investors, cornerstone investors, and sponsors?
Before the company's IPO, a total of three investors participated, with a post-investment valuation of RMB 1.646 billion, approximately HKD 1.792 billion, a discount of 55.04% compared to the offering price. This time, seven cornerstone investors were introduced, subscribing for USD 76.38 million, approximately HKD 597 million, accounting for 50%. The sponsor is solely sponsored by CICC, and the stabilizing agent is also CICC, which has performed well recently.
Lock-up arrangement: No lock-up for pre-IPO investors, 6-month lock-up for cornerstone investors.
Summary and subscription plan
Jiaxin International Resources adopts mechanism B this time, with 13,726 lots in both A and B groups. The A group is still mainly a lottery, and the B group should be stable with one lot in four tiers. Tungsten resource companies have been performing well recently, with Xiamen Tungsten currently at RMB 42.3 billion. Jiaxin International's mineral resource volume ranks fourth, roughly estimated at RMB 5-6 billion, converted to HKD 5.5-6.5 billion. This issuance valuation is HKD 4.796 billion, with a middle value of about 25% space.
Now resource companies are not what they used to be. Under the current global economic environment, resource-listed companies are performing well. Jiaxin International's listing under the current environment is not a big problem. Now the new regulation chips are highly concentrated. If it were the previous distribution mechanism, this type of stock really needs to be considered. There are also many problems, such as continuous losses, tight cash flow, no lock-up period for pre-IPO investors, etc. But the situation stands on the side of new stocks. Rare things are precious. If you can get it, consider other issues. After all, having a mine at home, just go for it!
$JIAXIN INTL RES(03858.HK)
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