HK IPO | Smart Mining: Having mines = auto win, Zhaojin Mining M&A concept stock

Guoxia Tech, which closed today, ultimately chose not to go for financing. I tried my luck with cash and got a few dozen hands.

This stock is unlikely to make it to Group B, so it's probably just a runner-up. The tail end of Group A might get one hand, with an ideal scenario of a 25% profit after entering the market. After deducting financing fees, potential interest, and handling fees, there might be around 250 left. The head of Group B might make more, probably around 1,000 to 1,500 in profit. The risk-reward ratio for Group A financing isn't great, but Group B is still acceptable.

The reason I didn't go for it is the pricing was too high, and a market-based issuance would definitely break the issue price. Of course, there were rumors beforehand that the issuing institution was very keen to enter the market, but I didn't dare believe it too much. If the rumors are true, retail investors might still get a small piece of the pie this time. If the grey market rises by about 10% and the institutional placement doesn't dump, it might still be worth participating. But if it goes over 15%, forget it—I won't even try to salvage it if it breaks the issue price. Ride the tailwind if you can, but don't fight against it.

As for Hashkey, I'll just mention it in passing. With a market-based issuance and scattered institutional placement, I'm not too keen on participating—not even want to touch it with cash. All signs point to them just trying to sell the company, with no real intention to enter the market. Once listed, that's it—there's no possibility of any market cap management.

Of course, if you're eager to jump in because of Hong Kong's compliant crypto exchange label, I won't stop you. After all, you've made gains in Web3, so giving back to the community is fair. Who knows? Maybe you'll bet right this time. But I'm not betting.

Baoji Pharma exited at 66 as per the earlier script, making a small profit of less than 4,000. Brother Dong's industrial play broke even, losing only the handling fees and opportunity cost—less than 100 in total losses. Combined, it's a small gain.

Back to the topic at hand.

Let's not dwell on the fundamentals of Zhihui Mining—having mines is enough. It's mainly lead and zinc mines, with a bit of copper. In Tibet, it's not even a top-tier mine owner, with its core asset being the Mengya mine. The underground mine set for production in 2025 is the key driver for this earnings surge. Going from one mine to two is often a major turning point in the game.

From 2022 to 2024, the company's performance was flat due to mine upgrades and pandemic impacts. The big earnings surge in 2025 is mainly due to the commercialization of the underground mine in Q2, as mentioned earlier. As of July 31, revenue was about 257 million yuan, up 250% YoY, with net profit around 51.74 million, turning a profit YoY. But none of this really matters—mining companies aren't valued using PS or PE.

This issuance's market cap is 2 to 2.2 billion, likely priced at the upper limit of 2.2 billion HKD. It's just a small float, so it's prone to wild swings.

The cornerstone investors are decent, with this year's big mine owner Zhaojin Mining's subsidiary Spike and state-backed Greater Bay Area as cornerstones, accounting for 40.78%. Spike and Greater Bay Area are also cornerstones for Zijin Gold International, making a killing. Spike is also a cornerstone for Chifeng Gold, which didn't do well at its IPO but has seen its market cap soar this year with the gold rally. Plus, Zhaojin has money, and Zhihui has mines—a potential M&A can't be ruled out.

No greenshoe, and it won't likely need one. Without a greenshoe, it's probably gearing up for a meme stock run.

The sponsors aren't great, though. Guojin Securities, which just sponsored Tiantai Semiconductor (heard many were tricked by influencers into applying), saw a 30% loss on the first day. They also recently sponsored Xiangjiang Electric (which tried but failed to manipulate the clawback due to poor execution) and Paike (a rare case of a biotech B breaking issue price). Jihong and Healthy Path are both meme stocks. It's either to the moon or the gutter. The other sponsor, Momentum Capital, did okay with Bama recently, but Shouhui Group broke issue price and is also a meme stock hub.

Given Zhihui's small market cap and meme stock ambitions, it's no surprise they didn't go for star sponsors. Guojin and Momentum Capital will do.

Total issuance is 121.952 million shares, with 1,000 shares per lot. The public offering is 10%, or 12,196 lots. The subscription rate should be decent—better than the few-thousand-lot lottery stocks but worse than Baoji's tens of thousands.

Baoji Pharma was 269.2 billion, Zhuoyue Ruixin was 191.2 billion. I estimate this one might be similar to Zhuoyue Ruixin but with double the supply. At this volume, the tail end of Group A seems better, with an estimated subscription rate of 30% to 50%, while Group B might be about 10% lower.

Expected gains of 50% to 100%, though meme stocks have no ceiling. So expected profit for Group A tail = 0.4*4500*0.75=1,350, with Group B slightly worse.

Costs are roughly calculated: losing costs about 200, winning costs about 300+, winning earns 3,000, losing loses 200. Expected profit is around 1,100.

The risk-reward ratio is acceptable, mainly because of the mines + cornerstones, making me feel the win rate is 95%+. Hope the institutional placement stays stable.

Barring surprises, I'll probably go for the tail end of Group A, plus two fafa's safety net.

It conflicts with the funds for 18C's Xidi Autonomous Driving, which I'll analyze in detail tomorrow—likely won't go for it. Any changes will be announced in the group, with a final conclusion on Monday.

$ZHIHUI MINING(02546.HK)