Today, the A-share tech sector saw a slight rebound and recovery, but the rebound was weak, and it directly plunged after the afternoon session; Hong Kong stocks were relatively more stable today. Combined with the AH-share discount logic discussed in the previous article, Sanhuan and Dingtai still closed lower today, and their safety cushion level will be somewhat eroded, but the logic remains unchanged. My trading strategy was already clearly explained in the comments section of yesterday's article, so I won't repeat it much here.

Back to today's main characters. Both are AH-shares, with discounts in the 52-53% range, and their styles are quite similar, but a closer look reveals significant differences in logic: one has a chemical background + hydrofluoric acid concept, with a thick discount but weak net profit; the other is among the top three domestic wafer foundries, with better fundamentals but a relatively expensive PEG and a slow entry into the Southbound Stock Connect due to a green shoe. How to choose? Read on.

01 Binhua Co., Ltd. (06745.HK)

A chemical company, with three main business segments: chlor-alkali chemicals (caustic soda, liquid chlorine), C3/C4 chemicals (propylene oxide, MTBE), and wet electronic chemicals (electronic-grade hydrofluoric acid). To be direct here—the only profitable segment is chlor-alkali. The C3/C4 segment directly incurred a gross loss in 2024, dragging down the company's overall gross margin by 10.3 percentage points; the electronic-grade hydrofluoric acid in the wet electronic chemicals segment has been hyped by the market for the AI chip concept, but hydrofluoric acid accounts for only 0.4% of the company's total revenue, with a gross margin still at -1.6%. Currently, it's basically a pure concept with no substantial contribution. The rally on the A-share market was mainly supported by this narrative, and whether the Hong Kong market will embrace this sentiment is an unknown.

Issuance details: Jointly sponsored by Huatai + CCB, no green shoe, offering price range of HK$3.05-3.59. The current A-share price is about 6.93 yuan, with an AH discount of about 52%, significantly exceeding the average discount for traditional chemical peers (30-45%). Public offering is about 35,213 lots, with 1,000 shares per lot, and the minimum subscription fee is about HK$3,590. There are 7 cornerstone investors totaling 33.41%, led by China Hongqiao, including Aurora SF, Tiantu, etc., a decent lineup.

Xiaoxin's judgment:

A thick enough discount and fast enough entry into the Southbound Stock Connect are the two biggest selling points of this stock. However, there are several pressure points on the fundamentals to be clear about: revenue grew from 7.3 billion to 14.8 billion over three years, which looks impressive in terms of growth rate, but net profit was 379 million → 217 million → 235 million, almost stagnating or even declining over three years. While revenue doubled, profit actually shrank by half. The Q1 2026 net profit of 146 million, up 52.55% year-on-year, is good news, mainly due to the recovery of chlor-alkali product gross margins, but this recovery has little to do with AI; it's the inherent fluctuation of the chemical cycle itself.

Compared to the strong comparable company Shanghai Petrochemical, which has an H-share discount rate of about 68%—this means a 53% discount is not the thickest among chemical AH-shares, nor is it significantly overvalued. The absence of a green shoe ensures entry into the Southbound Stock Connect on the first day. The speed of southbound capital inflow is the core support for speculation. However, whether there will be capital willing to take over after entry is a question, as the company's net profit scale cannot support too much imagination. The discount logic holds, participation is possible, but expectations should be lowered.

Overall conclusion from major influencers:

Kai 8.0 points: "A 52% discount is the ace, Q1 2026 net profit up 52.55% YoY, fast entry into the Southbound Stock Connect without a green shoe, overall participation possible"; Daily Teacher 3-5 stars; Shi Xi: "High revenue growth but continuously declining net profit is the core hidden risk"; Wen Teacher: "Not very interested"—Thick discount + fast entry is the consensus, but weak net profit dampens the enthusiasm of some teachers.

02 Nexchip Semiconductor Corporation (02249.HK)

12-inch pure-play wafer foundry, ranked ninth globally and third in mainland China by revenue in 2025, and number one globally in the display driver IC (DDIC) foundry segment. Technology nodes cover 150nm to 40nm, with a 28nm logic platform already developed. From 2020 to 2025, among the world's top ten wafer foundries, the company's capacity and revenue growth rate ranked first globally—starting from a relatively small base and scaling into the global top ten in five years, you have to give it a thumbs up for that.

Issuance details: Solely sponsored by CICC, with a green shoe, offering price range of HK$30-32.3. The current A-share price is about 61.10 yuan, with an AH discount of about 51.4%. Compared to peers like SMIC (discount ~49.86%) and Huahong Grace (discount ~40.9%), Nexchip's discount level is slightly thicker. Public offering is about 216,000 lots, a large quantity ensuring easy allocation, with 100 shares per lot, and the minimum subscription fee is about HK$3,230. Over 20 cornerstone investors totaling 48.1%, covering both industrial and financial capital, including Hillhouse, Gaoyi, GF Securities, Chery, GoerTek, etc., a superior lineup.

Xiaoxin's judgment:

Fundamentals are the better of today's two—revenue 7.18 billion → 9.12 billion → 10.89 billion, net profit 210 million → 530 million → 700 million, net profit CAGR of 82.2%, and operating cash flow of 3.8 billion in 2025. The capital-intensive model determines a net profit margin of only 4-6%; it's hard work, but at least it's solid revenue, not reliant on concepts.

One aspect of the valuation needs to be faced squarely: PE of 88x, PEG of 2.73—the discount is halved, but the PEG is still far above 1, and the corresponding earnings growth cannot support this valuation multiple. The cornerstone lineup is impressive, but the valuation level doesn't leave much safety margin for IPO subscribers. Plus, having a green shoe means waiting 30 days for entry into the Southbound Stock Connect; southbound capital cannot enter immediately on the first day, so the discount recovery pace is slower than Binhua's. Among the two, it has better fundamentals and stronger cornerstone support, with an extremely low risk of breaking the issue price, but its upside potential is also limited. Treat it as a stable stock for subscription, don't expect a big rally.

Overall conclusion from major influencers:

Kai 7.7 points: "Capital-intensive + quite high discount + large quantity, passed"; Daily Teacher 3-5 stars: "Large quantity, typical AH discount stock"; Shi Xi: "Strong performance, net profit CAGR of 82%"; Wen Teacher: "Large quantity, mediocre, low probability of breaking issue price but not much meat either"—Overall neutral to slightly positive, high certainty, low risk of breaking issue price, suitable for large capital pursuing a stable strategy, don't expect too much upside.

Xiaoxin's closing remarks

 Compared to the previous two batches, the overall upside potential of this batch is much weaker, more like defensive core holdings.

For those who didn't subscribe enough in the previous two batches, adding this batch as stable holdings is acceptable; if you've already used up your bullets, there's no need to force it.

(The above views are for entertainment and review purposes only and do not constitute investment advice. The stock market carries risks, and copying trades requires caution.)

The review of these 16 new stocks in this wave is basically complete. Yongkang will continue to update for everyone next week.