In the recent frenzy of Hong Kong IPO listings, HIPINE (02583) has captured significant attention. Since its debut on the Hong Kong Stock Exchange in late September, this gold watch-focused brand has quickly become a market sensation: its shares skyrocketed 258% on the first trading day, followed by another 71% surge the next day, with cumulative gains nearing 480% to date. Its market capitalization has surpassed HKD 10 billion, making it one of the most dazzling "star IPOs" in Hong Kong's 2025 market.
Analysts suggest that HIPINE's rally is not primarily driven by fundamental improvements but rather by expectations of its inclusion in the Stock Connect program. Its IPO structure, liquidity characteristics, and market cap trajectory resemble the path taken by some small-cap stocks in recent years that sought rapid inclusion in the cross-border trading mechanism.
**Concentrated Float, Persistently Low Turnover** HIPINE's post-listing performance is closely tied to its issuance structure. According to its prospectus, the company offered only 10.6 million shares globally, with just 10% (1.06 million shares) allocated to retail investors (Hong Kong public offering). This means over 90% of the shares were locked up by cornerstone investors and institutional buyers at the time of listing.
Facing a staggering 2,505.9x oversubscription from retail investors, the meager 1.06 million shares were quickly exhausted, leaving minimal tradable supply on the debut day. This extreme "cornering of shares" created an ideal environment for market manipulation. Instead of a prolonged accumulation phase, major players could easily drive prices up with relatively small capital, resulting in a "violent rally."
While the stock surged wildly in the first two sessions, trading volume plummeted from 2.82 million shares on the first day to just 620,000 by the third day—a classic case of "divergence between price and volume." Current turnover rates hover around 0.1%, further confirming that the initial frenzy was not driven by market consensus but rather by a "frictionless pump" due to tightly held shares.
**Market Cap Management Targets Stock Connect Review Window** HIPINE's performance has drawn particular attention due to expectations of its potential inclusion in the Stock Connect program. Adjustments to the Stock Connect list occur semi-annually, typically in June and December, with inclusions taking effect in September and March.
To qualify, a stock must meet a minimum average market cap of approximately HKD 9.4 billion during the review period. As of December 15, HIPINE's average market cap stood at HKD 9.848 billion—just above the threshold—while its monthly liquidity also met requirements. Notably, on December 16, its market cap briefly dipped below HKD 9.3 billion before rebounding and stabilizing around HKD 9.4 billion, suggesting deliberate "market cap maintenance."
Smaller brokers like uSMART Securities and ABN AMRO recorded modest net buys, while larger institutions such as Goldman Sachs and Huasheng Securities were net sellers. This trading pattern hints at "stabilization" efforts, where smaller brokers execute short-term trades while major players remain cautious.
Stock Connect rules impose no minimum listing period for new stocks, enabling a "fast-track inclusion" strategy—where companies can list in one quarter and qualify for inclusion in the next. This has led to a recurring pattern among recent IPOs:
- Lack of institutional holdings or analyst coverage, with market cap and liquidity driven by short-term capital rather than operational performance. - Severe disconnection between stock prices and fundamentals.
Once included, speculative capital often exits abruptly, triggering steep declines of 30%–90% as retail investors and southbound flows bear the brunt—highlighting gaps in the Stock Connect inclusion mechanism's risk controls.
**Business Growth Amid High Customer Concentration** HIPINE is a leading domestic gold watch brand, generating revenue primarily through its flagship "HIPINE" branded precious metal timepieces. According to Frost & Sullivan, it held a 27.08% market share by GMV in China's gold watch segment in 2024.
However, its capital market journey has been rocky: after two delistings from China's NEEQ (2016 onward), it finally succeeded in its Hong Kong IPO on September 30 this year following two failed attempts.
Despite leading China's precious metal watch sector, HIPINE's financials show volatility. Revenue grew from RMB 324 million (2022) to RMB 457 million (2024), but growth slowed markedly in 2024. Net profit fluctuated between RMB 24.5 million (2022) and RMB 52.1 million (2023), dipping to RMB 49.3 million in 2024.
Encouragingly, performance improved in early 2025: revenue rose 21.6% YoY to RMB 231 million in the first five months, with net profit reaching RMB 42.8 million (86.7% of 2024's full-year figure). Still, this hardly justifies its current HKD 10 billion+ valuation.
Challenges remain: 1. **Intensifying competition**: While HIPINE leads China's gold watch market (24.98% volume share), it faces pressure from rivals in a concentrated top-five-dominated sector (37.48% combined share). It must also compete with global luxury brands in high-end segments and tech giants like Huawei and Xiaomi in mainstream smartwatches. 2. **Overreliance on key clients**: Sales to the top five customers accounted for over 87% of revenue from 2022–2024, with the largest single client contributing up to 35%. This weakens pricing power and amplifies operational risks.
In summary, HIPINE's case reflects market enthusiasm for IPOs with thematic appeal and systemic opportunities. Its performance stems from multiple factors—industry focus, business positioning, initial liquidity, and Stock Connect expectations. Investors should exercise caution with such high-attention, high-volatility stocks, prioritizing long-term competitiveness, financial sustainability, and core risks over short-term hype.
Comments