Trading Strategy of Zijin Gold on the First Day of IPO

Zijin Gold [Bullish]

• Zijin Gold IPO will start trading on 30 September. Zijin Gold is aiming to raise US$3.2 billion (HK$24.98 billion) from its IPO, offering 349 million shares at HK$71.59 each.

• Our base case valuation of Zijin Gold is HK$124.7 per share (74.2% higher than the IPO price). We expect a sharply higher pop on the first day of trading.

• If its share price appreciates more than 30-50% or more, we think it is prudent to take some profits off the table (at least 25%-30% of total investment).

Zijin Gold (2259 HK) IPO will start trading on 30 September (instead of 29 September) due to the delay caused by the Super Typhoon Ragasa. Share allocation results will now be revealed on Monday (29 September). Zijin Gold is aiming to raise US$3.2 billion (HK$24.98 billion) from its IPO, offering 349 million shares at HK$71.59 each, with retail investors granted access to 10 per cent of those shares, while the remainder is allocated to international institutional investors. If the overallotment option is exercised, the IPO could raise a total of US$3.7 billion (HK$28.7 billion).

Zijin Gold’s IPO has garnered significant interest from retail investors. The firm’s international placement for institutional investors, totalling HK$22.48 billion, was completed with a positive response as well.

Initial Market Cap - At the IPO price of HK$71.59 per share, the initial market cap would be HK$187.9 billion (US$24.2 billion). Assuming the overallotment option is exercised, the initial market cap would be HK$191.6 billion (US$24.6 billion).

Source: Zijin Gold IPO prospectus

Trading Strategy of Zijin Gold on the First Day of IPO - We expect a sharply higher pop on the first day of trading for Zijin Gold. If its share price appreciates more than 30-50% or more, we think it is prudent to take some profits off the table (at least 25%-30% of total investment).