$HUAQIN(03296.HK), which just listed on the Main Board of Hong Kong stocks on April 23rd, had an IPO issue price of HK$77.70 and closed at HK$88.00 on its first day (+13.3%). During the subscription period, it was oversubscribed by 530 times. Its market capitalization at listing has already reached HK$105.494 billion — a company that just had an IPO in the ODM business is valued at over one hundred billion, which points to a rather typical Hong Kong stock valuation puzzle.

Huaqin is one of the ODM giants in mobile phones / laptops / servers / IoT, acting as "the invisible hand behind brand owners." Together with Wingtech and Longcheer, it forms the top tier among the three major Chinese ODM players, with revenue exceeding one hundred billion RMB. However, the gross margin of the ODM business itself has always been criticized — ranging from 5%–8%, with significant cyclical fluctuations in profit margins. Its highlight in recent years has been AI server ODM — the AI training chassis it makes for ByteDance, Tencent, and Alibaba have a significantly higher gross margin than mobile phone ODM. This is the core reason why this IPO valuation was justifiable.

The 530 times oversubscription corresponds to the scarcity on the IPO day — but scarcity depreciates quickly after the lock-up period expires. I won't chase after a newly IPO'd ODM stock; I'll wait for the pressure from the first-month lock-up expiration to be released and then look at the Q1 performance before making a judgment. The actual numbers from the AI server ODM business in operation are more worthy of reference than the first-day stock price.