[HK IPO Subscription] Sturgeon Technology, the world's number one in caviar, is it worth subscribing?

Hello, I'm Lu Xian. I research the investment field and share overseas information.

The previous post shared LaiFu Harmonic. Today, let's look at a consumer company with a very unique business — Sturgeon Technology. The company sells caviar, and its brand "KALUGA QUEEN" has maintained the top global sales position for 11 consecutive years. The focus is on its industry position, valuation, and biological asset accounting.

1. New Share Issuance Overview

Company Name: Hangzhou Qiandaohu Sturgeon Technology Co., Ltd. (06715.HK)

Global Offering: 16,332,900 H Shares

Hong Kong Public Offering: 1,633,300 Shares

International Offering: 14,699,600 Shares

Issue Price: HK$75.50

Board Lot: 100 Shares

Minimum Subscription Fee: HK$7,626.14

Cornerstone Investors: 8 in total, collectively subscribing for approximately HK$615 million, representing about 49.88% of the Global Offering

Greenshoe: Yes

Sponsors: CITIC Securities, China Securities International (Hong Kong)

Reallocation Mechanism: Mechanism B

Subscription Period: June 22 — June 25

Allotment Results Announcement: June 26

Expected Grey Market Trading Time: June 29, 16:15—18:30

Listing Date: June 30

Market Capitalization: HK$8.221 billion

Group A Tail: 600 Board Lots

Group B Head: 700 Board Lots

Top Hammer: 8,166 Board Lots

2. Company Fundamental Analysis

Sturgeon Technology is a caviar company that handles everything from breeding, farming, processing to sales in-house. Based on 2025 sales volume, the company holds a 36.1% global market share, more than four times that of the second-place player, with products sold to 46 countries and regions.

The company's core product is caviar, contributing RMB 698 million in revenue in 2025, accounting for 90.8% of total revenue; the remainder mainly consists of sturgeon meat and deep-processed products. The brand "KALUGA QUEEN" has entered international airline first-class cabins, hotels, and high-end dining channels.

From 2023 to 2025, the company's revenue was RMB 577 million, RMB 669 million, and RMB 769 million, respectively, with net profits of RMB 273 million, RMB 324 million, and RMB 365 million; adjusted net profits were RMB 313 million, RMB 334 million, and RMB 401 million, respectively. In 2025, operating cash flow was a net inflow of RMB 270 million, with both profitability and cash flow being relatively stable.

The overseas sales proportion increased from 76.7% to 83.8%, with the US contributing 28%, and Germany, France, and Russia also being major markets. The high overseas proportion indicates the company has a global channel, but tariffs, exchange rates, logistics, and geopolitical changes can directly impact performance.

Customer concentration is not high. In 2025, the top five customers accounted for 38% of revenue, with the largest customer at 9.6%. Supplier concentration is relatively higher, with the top five suppliers accounting for 54% of procurement, and the largest supplier at 32.6%, mainly for feed and external sturgeon procurement.

The most critical aspect to understand for this company is its biological asset accounting. Sturgeon farming typically takes 7 to 15 years, and immature sturgeons have their fair value changes recognized based on valuation models. In 2025, approximately RMB 41.75 million of the company's net profit came from fair value adjustments of biological assets, which is a non-cash accounting gain. Excluding this portion, the profit for the year was about RMB 323 million, still profitable, but the nearly 48% surface net profit margin should not be the sole focus.

As of the end of 2025, the book value of biological assets was RMB 1.749 billion, accounting for 83.1% of net assets. This is both a resource barrier and a source of risk: fish diseases, floods, water quality, and price changes can all affect valuation and production.

In terms of valuation, the issue market cap is approximately HK$8.221 billion. Based on 2025 net profit, the P/E ratio is about 19.6x; excluding biological asset fair value adjustments, it's about 22x. For a consumer goods company with double-digit revenue growth and the top global market share, this is not unreasonable, but it's also not significantly undervalued.

3. IPO Subscription Analysis and My Action

The advantages of this new stock are relatively clear: prominent industry position, consecutive revenue and profit growth, positive cash flow, and manageable customer concentration. The eight cornerstone investors include institutions like BlackRock, Barings, Taikang, Greenwoods, Dacheng, and ICBC Wealth Management, locking up about 49.88% of the offering, indicating strong backing.

The offering has a greenshoe, with CITIC Securities and China Securities International (Hong Kong) as joint sponsors. The initial Hong Kong public offering is about 16,300 board lots, not a large size, but the minimum subscription fee per board lot exceeds HK$7,600. Mechanism B allows a maximum reallocation of only 15% of the Global Offering. If subscription is hot, the allotment rate may not be high.

There are three main risks: caviar is a high-end discretionary consumption, susceptible to economic cycles; high overseas revenue proportion carries significant trade and exchange rate risks; biological asset valuation is complex, and book profit cannot be fully equated to cash profit.

Overall, Sturgeon Technology's fundamentals and offering structure are more solid than the average Hong Kong stock IPO, and the valuation is within an acceptable range. Short-term highlights include being the global leader, nearly 50% cornerstone backing, and a small public float, but the risks related to biological assets and consumption cycles should not be ignored.

My action: Subscribe.

$XUNLONG SCITECH(06715.HK)