Iran's divine assist, daytime Hong Kong stocks surged! Analysis of IPOs for Perfect Medical Technology and Rongli Construction!

1. Iran's Divine Assist, Hong Kong Stocks Soar, But Retreat Significantly at Night!

Today, Hong Kong stocks surged and flooded the screens

Certain sectors (brokerages, real estate) $CMSC(06099.HK) $CHINA VANKE(02202.HK) saw individual stocks doubling frequently

As everyone knows, Brother Cai is a blogger who trades in Hong Kong, U.S., and A-shares (plus Hong Kong IPO subscriptions)

Benefiting from the surge in Hong Kong stocks, Brother Cai's Hong Kong account also gained 8% today, outperforming the Hang Seng Index but underperforming the Hang Seng Tech Index

However, the surge in Hong Kong stocks was not smooth sailing

On the day A-shares were closed (Monday), the Hang Seng Tech night futures plummeted by 4.5% at Monday's close, nearing the limit-down (night futures have a 5% limit)

This shows that foreign investors are relatively more rational than domestic investors

The turning point for today's surge in Hong Kong stocks occurred when Iran launched 200 missiles at Israel last night

That night, Hang Seng Tech futures surged, and today, Hong Kong stocks rallied strongly on this momentum

Iran's attack on Israel raised market concerns that Israel might drag the U.S. into the conflict, so foreign investors realized that the safest environment right now is still our country

With A-shares closed, foreign investors rushed to buy Hong Kong stocks as a hedge

It can be said that Iran provided a divine assist!

However, after the daytime surge, some foreign investors became rational again at night and chose to take profits

As of writing, Hang Seng Tech night futures have started to fall again, currently down nearly three points

So, what about A-shares?

As long as Hong Kong stocks don't plummet overall during the National Day holiday (not just a single day's performance but the overall trend), A-shares will surge on the first trading day after the holiday

There are still three trading days left in the Hong Kong market during the National Day holiday. It's unrealistic to expect daily surges—just no major overall decline!

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2. Analysis of Taimei Medical Technology and Rongli Construction IPOs

Let’s talk about Hong Kong IPO subscriptions

Currently, three new stocks are open for subscription. Thanks to the previous new stock, CAROTE, surging and the overall Hong Kong market rally,

the three new stocks currently open for subscription are very popular

But as Brother Cai mentioned in his last article, these three new stocks are nowhere near as good as CAROTE. Given their inferior quality and such high subscription demand, Brother Cai advises caution

In Brother Cai's IPO framework, new stocks are categorized into three types:

High-conviction IPOs, gambling IPOs (lottery tickets), and arbitrage IPOs. The subscription strategies for these three types differ.

High-conviction IPOs must be subscribed heavily or even all-in, like the previous CAROTE

Gambling IPOs (lottery tickets) are mostly skipped, with only a small portion subscribed lightly

Arbitrage IPOs are chosen based on valuation discounts, like the previous Midea Group

Today’s article will focus on Taimei Medical Technology and Rongli Construction

From a qualitative analysis, what type do these two new stocks belong to?

Brother Cai believes both are gambling IPOs, i.e., lottery tickets

For example, Taimei Medical Technology $TAIMEI TECH(02576.HK) has mediocre quality—even downright poor

Revenue has stagnated, and profits remain in the red

And its valuation is more expensive than peers!!

At the mid-price, Taimei Medical's PS ratio is 10.2x, while peer Yidu Tech's PS ratio is only 5.2x

As for Rongli Construction $WING LEE DEV(09639.HK), its market cap barely meets the HK$500 million threshold for a mainboard listing. It’s a small-cap stock, and historically, small-cap stocks often swing wildly, making them lottery tickets

However, Rongli Construction's quality is relatively better, ranking mid-to-upper among lottery tickets

For example, revenue and profits are growing, and cash flow is passable

The biggest downside is that Rongli Construction belongs to the construction sector, which has a poor historical track record. See the chart below

Most construction-sector IPOs have declined. The last one was Jixin International Holdings

Jixin had a decent gray market but still opened high and closed low on its debut, ending in the red

3. Subscription Strategy

Since Brother Cai categorizes both as lottery tickets, as mentioned above, gambling IPOs (lottery tickets) are mostly skipped, with only a small portion subscribed lightly

Even if subscribed, it must be light!

The worst scenario for lottery tickets is overheating. If oversubscribed over 50x, Brother Cai will skip them!

Taimei Medical is already oversubscribed 100x—definitely skipping this hype

Rongli Construction is also suspected of oversubscription over 50x. We’ll see tomorrow—if not over 50x, subscribe! $QINIU(02567.HK)

That’s all for today’s analysis. Hope this article helps! I’m Read Financial Reports & Discuss IPOs, an ordinary investor who loves reading financial reports, specializes in Hong Kong IPOs, and invests across Hong Kong, U.S., and A-shares—long-term focused with some short-term trading. See you next time!