Hong Kong IPO: Horizon's first-day performance expectations

After the reform of Hong Kong's new stock market, the allocation results are only announced on the "Disclosure Easy" platform after 8 PM the day before listing.

Previously, we could learn about the allocation results before the dark pool trading, allowing us to analyze the distribution of chips and guide dark pool trading operations.

But now, we can only rely on market monitoring or news to operate, without specific allocation results for reference, and have to gather information about international placements. The good thing is that the dark pool trading volume isn't that large, so careful analysis of the market can still reveal some clues about chip direction.

The international placement data shows an oversubscription of 13 times, which was close to my earlier estimate of around 12 times, so the result was in line with expectations.

After a 15% public clawback, the international placement was about 4.6 billion, with 4 cornerstone investors locking in 1.7 billion, leaving roughly 3 billion for institutions.

International placements shouldn't just be judged by the oversubscription multiple; quality matters too. If it's all "fragmented" oversubscribed placements, the stock won't perform well.

The good thing is that Horizon's international placement was genuinely oversubscribed by 13.8 times, mostly allocated to well-known long-term institutions, predominantly foreign ones. In the Hong Kong market, large institutional funds tend to discriminate against tech stocks, often undervaluing them.

The fact that long-term, reputable foreign investors are willing to put real money into Hong Kong tech stocks is already significant. The specific allocation details were analyzed yesterday, so I won't repeat them here.

From the dark pool trading perspective, structurally, I don't think it's as strong as China Resources Beverage, because I observed both dark pools, and Horizon didn't show the same level of institutional buying as China Resources did.

Of course, it could also be due to the limited capacity of the dark pool, as institutions rarely trade there. We'll have to see on the first trading day.

Overall, it still shows retail investors selling and big players buying, though not as obviously. Beyond market behavior, the chip distribution also provides some clues.

Looking at the allocation results, Group A allocations favored small and medium-sized investors, with a 100% lottery rate for one-lot applications. Most of the medium and large Group A chips were sold in the dark pool because the allocations exceeded their principal. Even if not all were sold, at least enough to reduce the position below the principal to avoid forced liquidation risks.

Yesterday's dark pool closed with a 26% gain, and the chart above shows my pre-dark pool expectations. I also correctly predicted China Resources' gain. Based on the allocation results and dark pool trends, I'm slightly more optimistic about the first-day performance. If it exceeds 45%, I'll start selling gradually, and if it reaches 55%, I'll sell everything.

I think this stock is worth tracking long-term—it has more potential than China Resources Beverage in the long run. But from an IPO speculation perspective, I'm not planning to hold it long-term. I got stuck with some Carolot shares earlier.

Since China Resources, many friends have privately messaged or asked in comments whether to buy, sell, or hold.

I've written articles on both China Resources and Horizon, and I've given clear expectations for gains. If you still ask, I really don't know how to respond.

Plus, it's a thankless job. If my expectations are too low and you sell too early, you'll blame me; if they're too high and you miss out on profits, you'll also blame me.

The key is, even if you follow my articles, you won't share your profits with me.

Also, intraday trends keep changing—it's not like I say 45% and the stock just flatlines at +45% all day. I'm just providing a reference; the rest is up to you.

I started writing this at work, aiming to post before 9 AM so it can serve as a reference before the market opens. That's all for now—apologies for any typos!