IPO Details

Purpose of IPO

• Raising up to HKD 221 million through offering 10.585 million H-shares at HKD 18.9–20.9 per share.

• Use of proceeds:

  • Expansion of production facilities in China, Thailand, and Indonesia.

  • Working capital for global distribution and R&D.

• This is clearly a growth-driven IPO, not meant for debt repayment.

Oversubscription

• Retail tranche was oversubscribed 16×.

• Margin financing for public offer reached approximately HKD 360 million.

IPO Placement & Shares

• Offer Breakdown:

  • Hong Kong public offer: 1.0586 million shares (10%)

  • International placement: 9.5268 million shares (90%)

• Total Shares Post-IPO:

  • Final shareholding structure reflects approximately 11–12.4% float post-listing, depending on over-allotment.

• Day-1 Outlook:

  • High oversubscription, small float, and anchor backing point toward a strong first-day performance.

Institutional & Anchor Investors

• Cornerstone Investors:

  • He Win: ~HKD 50 million (about 25–26% of the offering)

  • Reynold Lemkins: ~HKD 10 million (about 5%)

• Institutional Subscription:

  • The international tranche was fully allocated

Conclusion: Strong anchor commitments, full institutional book, and no early exits suggest solid IPO support.

Investment Bankers & Sponsors

• Sponsor and Lead Manager:

  • Guosen Securities (HK)

• Joint Global Coordinators / Bookrunners:

  • Citic International Securities and others

This strong syndicate helps ensure a successful launch and price stability on listing day.

Company Overview

Business Model & Industry

• Newtrend produces food-grade glycine and sucralose, used as sweeteners in beverages, foods, and pharmaceuticals.

• It operates production facilities in China and Southeast Asia, exporting to over 40 countries.

Financial Health

• Estimated ~35.2% of revenue comes from the U.S., exposing the company to international trade fluctuations.

Market Position

• One of China’s leading producers of sweeteners.

• Competitive advantage lies in geographical production diversity and global customer base.

Management Team

• While specific names are not disclosed in available summaries, the company has been operating for nearly 20 years, indicating experienced leadership.

Sector & Macro Trends

a. Sector Trends

• Global demand for sugar substitutes like sucralose is increasing due to rising health consciousness.

• Functional foods and clean-label ingredients are growing in popularity worldwide.

b. IPO Timing

• Subscription period: 30 May – 4 June 2025

• Listing date: 10 June 2025

c. Economic Environment

• Macroeconomic backdrop supports healthy eating and natural sweetener industries, though U.S.-China trade tension may affect exports.

d. News & Developments

• Financial media flagged concern over trade exposure, particularly U.S. tariffs affecting the ~35.2% of Newtrend’s export revenue.

e. Market Conditions

• Hong Kong IPO market is showing positive investor appetite during this period, particularly in consumer and specialty chemical sectors.

f. Prospectus Summary

• Growth plans include production expansion and international market diversification.

• Emphasizes increased R&D, capacity, and supply chain resilience.

g. Risk Factors

• Heavy dependency on U.S. market (35.2% of revenue).

• Global sugar substitute markets are competitive and price-sensitive.

• Raw material price volatility is also a concern.

h. Growth Strategy

• Expand plants in Southeast Asia.

• Broaden global distribution channels and diversify export destinations to reduce market risk.

i. Ownership & Lock-in

• Cornerstone investors hold approximately 30–31% of offered shares.

• Standard lock-up periods of 6–12 months likely apply to anchor investors and insiders.

📊 Peer Comparison Table

🧩 Notes on the Comparison

• Newtrend’s Data (IPO Stage):

  • High U.S. revenue concentration at 35.2% raises exposure risk but reflects strong sales to developed markets.

  • Margin and ROE data will clarify post-IPO once financials are publicly available.

• Peer Averages (across relevant companies):

• Valuation: Newtrend’s implied valuation (~HKD 2 B) is within the norm for mid-tier players but must be confirmed with financials.

• Growth: Global peers show steady growth and stable ROEs, which Newtrend must replicate to justify IPO enthusiasm.

• Risk: Its 35.2% U.S. exposure is the highest among peers, making it more vulnerable to trade policy shifts or tariffs.

• Upside: If Newtrend achieves peer-average margins and ROE, it could justify a forward P/E multiple of 10–15× post-IPO.

c. 10-Day Sector Trends

• Hong Kong’s mid-cap consumer and chemicals segments are showing 3–5% upside in the week prior to IPO.

• Momentum supports moderate price appreciation at listing.

IPO Allotment Result

• Retail portion oversubscribed 16×

• Margin financing of approximately HKD 360 million signals high leverage participation

• Full institutional uptake confirms strong backing

Final Assessment

• Estimated First-Day Price Range: HKD 22.00–24.00

• Performance Expectation: Mild to strong upside (~10–15%) anticipated on listing day.

• Is It Worth Subscribing?:

  • Yes, for investors targeting stable, medium-term growth in health-oriented ingredients.

  • Watch for U.S. policy risks and FX exposures.

Prospectus Download

https://www.hkexnews.hk/listedco/listconews/sehk/2025/0530/2025053000073.pdf

Thank you