Hong Kong's latest IPO, the Snowflake Group (stock code: 02097.HK), is garnering significant attention as it prepares to debut on the Hong Kong Stock Exchange this coming Monday. Ahead of its official listing, the stock has exhibited strong demand during pre-listing negotiations, with impressive gains noted on several trading platforms.
According to reports from Futu Securities, Snowflake Group's stock opened with a notable increase of 22.5%, pricing at HK$248 during after-hours trading. The stock's movement suggests great investor interest, peaking at HK$280 before settling at HK$250, marking a significant 23.5% gain over its initial public offering (IPO) price of HK$202.5. The trading volume reached approximately 2.9 million shares, accounting for HK$7.46 billion.
Meanwhile, on the Phillip Securities trading platform, the stock's performance was even more pronounced, opening at HK$278, climbing up to 285—an astonishing 40.7% rise—and eventually closing at HK$257, which is 26.9% above the IPO price. The trading activity yielded about HK$6.57 billion with approximately 2.47 million shares exchanged. Investors engaging with the stock could be looking at paper gains of up to HK$5,450 for the standard lot size of 100 shares.
The demand for shares has been highlighted by the massive oversubscription seen during the IPO process, which ran from February 21 to February 26. The group aimed to raise HK$34.5 billion by issuing 17.06 million shares, with 10% allocated to public offerings. Interest surged dramatically, resulting in oversubscription rates noted at 5,266 times, surpassing prior records established by other high-demand stocks.
Analyzing this momentum, Li Huifen, Director of Research at Huaying Oriental Securities, expressed caution, noting the recent market downturn where Hong Kong stocks fell over 700 points. With external factors, including tariffs introduced by former U.S. President Donald Trump, she anticipates potential adjustments within the market next week, predicting levels could drop below 21,000 points. This potential fluctuation could lead to selling pressure on new stocks like Snowflake Group.
Li commented, "The price levels being reported suggest buying now could be similar to holding 'hot potatoes'; it may lead to trading losses shortly after purchase." This sentiment reflects the volatility often associated with high-flying IPOs, where initial enthusiasm can swiftly turn if broader market conditions shift.
The Snowflake Group has made its mark on the Hong Kong beverage scene through its flagship brand, Mixue Ice City, which has expanded rapidly from its first outlet in Mong Kok to nine locations across Hong Kong since entering the market last year. Notably, product pricing has adjusted due to rising rent and living costs, with beverages priced between HK$5 and HK$20. The brand's popularity primarily revolves around affordable yet high-quality offerings aimed at young consumers, reflecting trends seen previously with other successful tea and beverage brands.
Returning to the pre-listing trading activities, the price increases across trading platforms were consolidated. At the end of the after-hours trading session, Futu listed Snowflake Group at HK$250, achieving gains of 23.46%, and maintaining significant trading volume. Phillip noted it closed at HK$257 with gains of 26.9%, underscoring strong market enthusiasm. Meanwhile, Yuanta Securities also reported price increases, closing at HK$254.8 with comparable percentage gains.
Snowflake Group’s impressive IPO tactics, combined with strong branding strategies and effective market entry, have contributed to its current popularity among investors. The ability to attract significant investment, coupled with extensive pre-trading enthusiasm, suggests this stock could shape up to be one of the most talked-about IPOs of the year.
Looking forward, analysts recommend investors proceed cautiously with stocks demonstrating such volatility, especially amid fluctuated market conditions. The performance of Snowflake Group, both immediately post-IPO and down the road, will hinge on wider economic factors and internal company performance within the competitive beverage market.
With the listing date approaching, all eyes will be on Snowflake Group as it officially graces the Hong Kong Stock Exchange and embarks on this new chapter of its corporate venture.