Rate Of ReturnHK IPO Subscription|Quantitative firms don't do quant, only installment and ads
Last Friday, an Innovative Industrial with 100,000 lots was issued, and everyone disliked it for having too much supply and didn’t want to subscribe. Well, this time, they directly gave you a Quant Group with 2,670 lots. 1,335 lots each for Group A and B, and the hit rate for the hammer subscription is estimated to be less than 8%.
Surprised? Excited? More excitement is yet to come.
This Quant Group’s total fundraising is between 117 million and 131 million, with total listing costs of 118 million. Moreover, the fundraising purpose states that a total of 5.8 million will be used for R&D and promotion. Does this mean there won’t be an upper limit issuance? Listing costs + fundraising costs are about 124 million, which is the median issuance—what a coincidence.
This amount of money could probably be covered by a few hammer subscription big shots, so there’s no need to go through such a roundabout way to do this.
Therefore, the listing purpose is definitely not pure, and it’s highly likely not a genuine fundraising attempt. If they really wanted to raise funds, they could follow Innovative Industrial’s example and issue 25% of the shares, but they chose not to, issuing only 2.6%. With already low market capitalization and a small issuance, it’s a classic case of too many monks and too little gruel—this stock has all the hallmarks of a meme stock.
Then, look at the sponsors: the familiar CICC + CITIC Securities. It’s been so long that everyone might have forgotten, but CITIC loved playing the trick of clawback before the new policy. Now, with this meme stock, CITIC must be laughing heartily.
This kind of meme stock definitely won’t have cornerstone investors—those investors aren’t stupid. Locking in for over half a year just to wait for the major shareholders to sell the company?
Surprisingly, this time they actually included a greenshoe. This kind of meme stock probably won’t even need the greenshoe.
Based on the above analysis, the issuance market cap is likely to be the median issuance, which is just under 4.8 billion. To enter the inclusion line, it would need to reach around 11.8 billion, which means subscribing now is a guaranteed profit, at least a 1.5x return. Gotta leave some room for the future, right?
No need to analyze the fundamentals—meme stocks don’t care about fundamentals. No matter how good the current performance is, if the plan is for shareholders to sell the company, the future performance will surely reveal the truth.
Based on the above, we can roughly draw the following conclusions:
1. This fundraising is estimated at 180 billion, roughly 14,000x oversubscribed. The hit rate for Group A tail and hammer subscriptions won’t exceed 8%. Betting 100 to win 7,000, with only an 8% chance of winning. The expectation is still positive, so Group A tail and Group B should definitely leverage to bet.
2. The fafa Package A is useful this time, but with a 498 handling charge and a total quota limit, it’s highly likely you won’t get it. Those who do get it will surely pay 498, and if they hit, paying 1,000 in handling charges wouldn’t be excessive.
3. Friends with less than 200k, don’t leverage unless you can get fafa’s Package A. Otherwise, leveraging won’t improve your odds much. If the hit rate after leveraging is still under 2%, it’s purely negative expectation behavior.
The above conclusions are based on my analysis of public information and do not constitute professional investment advice. Please think twice before acting.
$QUANTGROUP(02685.HK)
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