The small uncultivated garden and DOGI have risen, how should we deal with the subsequent Healthway, Innoscience and iFlytek Medical Technology?

Huatai-sponsored Xiaocaiyuan surged on its first day of listing, redeeming past shame

Dobot's two major dark pools both rose nearly 9% today

Suddenly, market views about "listing to sell companies" came to an abrupt halt, replaced by a rush to buy what others ignored

So what's the logic behind Xiaocaiyuan and Dobot's rise?

Brother Cai believes the cold subscription was indeed a major factor

These two new stocks share the commonality that they can enter the Hong Kong Stock Connect as long as they stabilize

With cold subscriptions, only 10% of shares are publicly available, creating minimal selling pressure. Thus, companies only need minimal funds to stabilize prices for market cap management

This depends on whether the company wants to engage in market cap management

If they do, prices may rise around 10%; if not, prices could halve, like with Duodian Zhizhi. It all depends on individual risk tolerance

But recently, especially after Maogeping's 100% win rate and subsequent surge, a wave of newcomers arrived

These newcomers don't understand the logic behind new stock fluctuations, making them prone to blind investments

Here's a painful statistic: The top three historical drops in Hong Kong IPO subscriptions all occurred this year - Qiniu Intelligence, Duodian Zhizhi, and Zhonggan Communications

Initially, only a small portion of these subscriptions came from seasoned investors gambling - they knew the risks and controlled their positions

The majority who subscribed to these three were newcomers

Thus, understanding the logic behind new stock fluctuations is crucial

For example, the four currently open IPOs - Youjia Innovation (closed at noon today), iFlytek Healthcare Technology, Innoscience, and Health Journey - all saw increased margin data due to Xiaocaiyuan and Dobot's rise

Therefore, understanding these new stocks' fluctuation logic is vital. Let's analyze them one by one

1. Youjia Innovation$MINIEYE(02431.HK)

Due to Xiaocaiyuan's surge, Youjia Innovation's margin suddenly increased today

It's almost certain public allocation will exceed 15x - it depends whether CITIC plays tricks with reallocation (and whether they can set lower pricing)

Youjia Innovation's subscription plan was announced early in the circle - Brother Cai subscribed!

2. iFlytek Healthcare Technology$XUNFEIHEALTH(02506.HK)

1. The company was spun off from A-share iFlytek for listing

First, iFlytek's management has a terrible reputation in A-shares, as any veteran A-share investor knows

So how about its subsidiary?

First, it's losing money - unlike other loss-making IPOs, iFlytek Healthcare's losses are progressively worsening

Most importantly, the company's performance is FAKED - blatantly so

As shown, annual revenue is about 500-600 million yuan, but accounts receivable reach 600 million yuan

Accounts receivable exceed revenue

What does this mean?

It means virtually all revenue comes from unpaid credit rather than cash. The 2023 revenue of 556 million yuan was essentially fabricated through connections - the company actually has no real business

This would never pass A-share listing requirements - it's blatant fabrication

The accounts receivable quality reveals the truth

As shown, 450 million yuan of overdue receivables account for 78% of total receivables

This 450 million is essentially fabricated - the company's operations have basically collapsed!

iFlytek Healthcare Technology Subscription Plan:

Even with fabricated performance, if the company manages market cap for Hong Kong Stock Connect inclusion, dark pool and debut prices could still rise - similar to Dobot's 9% dark pool rise despite fabricated gross margins

3. Health Journey$HEALTHYWAY INC(02587.HK)

1. Brother Cai's first step in analyzing IPOs is examining balance sheets rather than income statements

Health Journey's balance sheet is healthy, showing neither iFlytek's excessive receivables nor Dobot's inventory-exceeding-revenue fabrication

Moreover, Health Journey achieved profitability long ago

As shown below, adjusted profits have been positive since 2021 and remain so

Thus, online articles claiming Health Journey remains unprofitable simply copy each other without examining prospectuses

However, while profitable, Health Journey faces unsustainable performance due to excessive competition!!!

Numerous companies in this sector have listed in Hong Kong - apart from leader WeDoctor's failed attempts, most smaller players have already arrived

By revenue, Health Journey ranks fifth with minimal market share

Amid fierce competition, runner-up Ping An Good Doctor and third-place Sihuan Pharmaceutical have seen declining revenues

Health Journey follows the same pattern

Latest performance shows revenue growth plummeting to 14.5% from previous highs - a cliff-like drop

Adjusted profits not only failed to grow but dropped 51% year-over-year - halved

The industry simply has too many players creating cutthroat competition

2. Valuation Analysis

For valuation comparison, since leader WeDoctor remains unlisted, we'll compare with Ping An Good Doctor and Sihuan Pharmaceutical

As shown, Health Journey's valuation exceeds Ping An Good Doctor's, with PS ratio 3.5x higher

This valuation is astronomically overpriced!

3. Health Journey Subscription Plan

Even with poor fundamentals and excessive valuation, if the company manages market cap for Hong Kong Stock Connect inclusion, dark pool and debut prices could still rise - similar to Dobot's fabricated margins and Xiaocaiyuan's decent performance but excessive valuation

4. Innoscience$INNOSCIENCE(02577.HK)

Innoscience differs completely from the above three

The difference is: the above three could enter Hong Kong Stock Connect through market cap management (stabilizing IPO prices)

But Innoscience could enter Hong Kong Stock Connect even if prices halved at debut, reducing market cap management incentives

Such companies require separate detailed analysis

That concludes today's analysis. Did you find it helpful? I'm Reading Financial Statements for New Stocks - an ordinary investor who enjoys reading financial statements, specializes in Hong Kong IPOs and cross-market investments (Hong Kong, US, A-shares), with a long-term primary and short-term secondary investment style. See you next time!