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

The previous post shared about Sangang Mstar Technology, Inc. Today we continue to look at an A-share electronic manufacturing company listing in Hong Kong - Dingtai High Tech. The company primarily produces PCB drill bits, milling cutters, grinding materials, and intelligent CNC equipment, and is the world's largest supplier of PCB drill bits. Key points to watch are the significant profit growth in 2025, the nearly 40% A/H discount, and a valuation exceeding HKD 160 billion.

1. New Share Issuance Overview

Company Name: Guangdong Dingtai High Tech Co., Ltd. (01377.HK)

Global Offering: 12,632,000 H Shares

Hong Kong Public Offering: 1,263,200 Shares

International Offering: 11,368,800 Shares

Maximum Issue Price: HK$380.00

Board Lot: 100 Shares

Minimum Subscription Fee: HK$38,383.24

Cornerstone Investors: 17 in total, accounting for approximately 41.45% of the Global Offering at the maximum price.

Green Shoe: None

Sponsors: CITIC Securities, HSBC

Reallocation Mechanism: Mechanism B

Subscription Period: June 30 – July 6

Allotment Announcement: July 7

Grey Market Time: July 8, 16:15-18:30

Listing Date: July 9

Market Capitalization: Approximately HKD 161.137 billion

Group A Tail: 100 Board Lots

Group B Head: 200 Board Lots

Top Hammer: 5,684 Board Lots

2. Company Fundamental Analysis

Dingtai High Tech primarily provides precision tools, grinding and polishing materials, functional film materials, and intelligent CNC equipment for the PCB manufacturing process. Its products are used in AI servers, data centers, automotive electronics, semiconductors, low-earth orbit satellites, consumer electronics, and other fields.

In terms of sales volume, the company ranked first in the global PCB drill bit market from 2023 to 2025, with a global market share of 29.2% in 2025. In terms of sales revenue, its 2025 market share was 22.9%, also ranking first globally. The company also possesses the world's largest production capacity for PCB drill bits and coated tools.

From 2023 to 2025, the company's revenue was RMB 1.295 billion, RMB 1.553 billion, and RMB 2.084 billion, respectively, with growth of 19.9% in 2024 and 34.2% in 2025. Net profit for the same period was RMB 219 million, RMB 227 million, and RMB 432 million, respectively, with an 89.9% growth in 2025. Adjusted net profit was RMB 445 million.

Gross profit margins were 35.1%, 34.7%, and 40.4%, respectively, while the net profit margin increased from 14.6% to 20.7%. In Q1 2026, revenue was approximately RMB 756 million, gross profit was approximately RMB 376 million, and the gross profit margin further improved to 49.7%.

Precision tools are the core business, with 2025 revenue of RMB 1.740 billion, accounting for 83.5% of total revenue. Among these, drill bits are consumables. Increases in PCB layer count and reductions in aperture size will increase tool usage and performance requirements. The capacity expansion of AI servers and high-end PCBs is currently the company's main growth driver.

However, business concentration is also relatively high. In 2025, over 90% of revenue came from mainland China, with overseas revenue accounting for 9.2%. The top five customers contributed 30.8% of revenue. Revenue from functional film materials fell by over half in 2025, recording a gross loss rate of about 7%.

The company has a long receivables collection cycle. In 2025, trade receivables and notes receivable were approximately RMB 1.221 billion, with a turnover period of 144 days. Bank borrowings increased from RMB 586 million at the end of 2025 to RMB 1.130 billion by the end of April 2026, as capacity expansion is increasing funding needs.

The company has begun mass production in Thailand and acquired the German PCB tool company MPK Kemmer. The new production base has a designed annual drill bit capacity of about 960 million pieces. It has also begun deploying embodied robots and high-end precision grinding machines, but revenue contribution from this segment remains limited in the short term.

In terms of valuation, there is a discount of nearly forty percent compared to its A-shares. Based on the maximum issue price, the company's market capitalization is approximately HKD 161.137 billion. Roughly calculated based on 2025 net profit, the P/E ratio exceeds 300 times, indicating the valuation already significantly reflects growth expectations for the AI server and high-end PCB industries.

3. IPO Subscription Analysis and My Action

For this wave of 15 new IPOs, the specific capital allocation is posted in the private group. Dingtai High Tech's advantages are its high industry position, existing profitability, and simultaneous growth in revenue, net profit, and gross margin in 2025. Drill bits have consumable attributes, and rising demand for AI servers, high-layer-count PCBs, and packaging substrates is more favorable for the company.

The issuance configuration is good. The 17 cornerstone investors include Shenghong Technology, HHLR, Aspex, Kingboard, CPE, CloudAlpha, E Fund, Taikang, Barings, and Dingying Investment, collectively locking up 41.45% of the offered shares.

Although the Hong Kong Public Offering has 1,263,200 shares, 126,300 of them are reserved for overseas employees. After deducting this portion, the ordinary public offering is about 11,400 board lots, which is very limited. The minimum subscription fee for one board lot exceeds HK$38,000, which is also a relatively high threshold.

The downside is that the company has no green shoe, only a share allotment adjustment right, which cannot be used for post-listing price stabilization. The valuation is also very high, so short-term performance will rely more on the A/H discount, cornerstone lock-up, and market sentiment.

Overall, Dingtai High Tech's fundamentals and growth are significantly stronger than most new IPOs, and the nearly 40% A/H discount is attractive. Although the valuation isn't cheap and there's no green shoe, the public float is small and the cornerstone investor configuration is strong, making the short-term conditions favorable.

My Action: Subscribe.

$DTECH(01377.HK)