After a period of continuous rebound, the Hong Kong stock market has begun to get rid of the haze of a long period of time before, and several important indices have all entered a technical bull market.

Entering March, the “flavor” of the bull market also spread to the IPO market. In the first week, a total of 2 IPOs were listed, namely Hongji Group and Lexi Group. The performance of the two IPOs on the first day was also quite impressive. In particular, Hongji directly doubled its listing on the first day and surged 136%, indicating that Hong Kong IPOs may once again enter the hunting season.

As for what kind of Hong Kong stock IPOs have a chance to become popular? The answer is scarcity, and most industry insiders will definitely consider it first. So which of the upcoming IPOs are worth taking a look at? Also, take a look below.

1. Belle Palace has a unique “scarcity”, a story of unlocking the potential of a “big horse-drawn carriage”

Not long ago, Yuandong Development issued an announcement recommending the spin-off of its important asset, Belle Palace Holdings Co., Ltd. (hereinafter referred to as”Bellagio Palace”) Listed independently on the main board of the Hong Kong Stock Exchange.

Afterwards, on the evening of March 14, Hong Kong Disclosure's official website published Paragon's post-hearing data collection and quickly announced plans to launch its initial public offering of global shares. On March 18, Belle Palace began an official stock offering.

Looking at Paragon from a different angle”scarcity“First, it can be reflected in its chance to win Hong Kong stocks first”The first European betting stock” Title.

In the Hong Kong market, the vast majority of listed gambling stocks, according to their regions, their main source of revenue is either from Macau, China, or from Southeast Asia. As yet, no gaming company's revenue comes from Europe. Furthermore, Paragon has already taken an initial leading position in the European market.

According to the prospectus, Belle Palace occupied 2.5% of the Czech slot machine market with 492 slot machines in fiscal year 2022, ranking 9th in market share. If Paragon were to successfully land on the Hong Kong stock market this time, then it would be the first person to “eat crabs.”

Second, the company's scarcity is also reflected in its online gaming business, which it is about to vigorously promote in FY24 —In the Hong Kong stock market, it is also the first listed gaming company in the Hong Kong stock market to obtain a license/license to conduct online gaming business issued by the Malta Gaming Authority (MGA).

Furthermore, Paragon is the first and currently the only European gaming integrated entertainment company whose shares are owned and controlled by a Hong Kong listed company. This special status not only lays a solid foundation for its future development, but also has the opportunity to bring more financial attention and support from the Hong Kong local market to Paragon.

With the support of Far Eastern Development, Belle Palace has not only received more resources and opportunities, but has also achieved perfect improvements and controls in terms of system and management, which can provide a strong guarantee for the “long-term stability” of Paragon.

According to public information, Yuandong Development is a large enterprise with business all over the world. It has deep accumulation and outstanding performance in various fields such as property development, hotel business, and gaming business. Its footprint covers mainland China, Hong Kong, Malaysia, Singapore, Australia, New Zealand, the United Kingdom and mainland Europe.

According to reports, the adjusted asset scale of Far East Development exceeds HK$67.9 billion. While we cannot underestimate the comprehensive strength of Far East development, we must not forget that the latter has the opportunity to continue to play a strong enabling role in the future — for example, Belle Palace has the opportunity to inherit the parent company's huge resource network, business style, and business advantages while obtaining industry incubation opportunities similar to the CIC model (that is, the Corporate Incubator model). This model not only incorporates business model innovation, organizational innovation, and capital innovation, but also represents the cohesion of advanced productivity and output.

For example, Far East Development can also provide Belle Palace with the possibility of collaborative combat, cross-selling, or even joint investment in places within its reach. This prompted the spin-off and listing of Paragon Palace, which is probably just the first step in the development of Far East. After the listing of Paragon Palace, we will have the opportunity to see more support and incubation ideas that Far East Development will have the opportunity to launch in the future.

Regardless of the viability of business implementation or the degree of business fit, the two sides have reserved sufficient room for future development. The development of the Far East in the Far East will continue to provide maximum support and guarantee for the release of the potential of Paragon Palace in the future, similar to the classic model of “protection and protection” such as “big horse-drawn carriages”.

Looking back and taking a comprehensive look, the “scarcity” of Belle Palace is extraordinary and extraordinary; it can indeed distinguish it from ordinary IPO companies. From the perspective of the company's growth and basic texture, Belle Palace is also unrelenting and able to stand alone.

2. The new fiscal year is expected to maintain a high level of profit growth, and betting performance is far superior to comparable industry averages

Paragon's latest prospectus has updated the performance data to the first half of fiscal year '24. Judging from financial data, it is quite rare that even during the outbreak of the global pandemic, Belle Palace's revenue was able to maintain rapid growth and successfully cross the cycle.

According to the prospectus, from fiscal year 2021 to fiscal year 2023, the company's total revenue also increased from HK$146 million to HK$529 million, with a cumulative increase of about 262% over three years, with a compound annual growth rate of 90.5% during the period. In the first half of the 2024 fiscal year, Paragon recorded a total revenue of HK$278 million, an increase of 15.6% over the previous year, making steady progress.

This outstanding performance was mainly due to the support of Far Eastern Development in 2018, and the correct choice of the company's strategic path since then, and the rapid implementation of team execution. Looking further, the company's profitability was also quickly unleashed.

From FY2021 to FY2023, the compound annual growth rates of Pak Lak Palace's annual profit and EBITDA recorded 315.5% and 63.0% respectively. In the first half of fiscal year 2024, the company recorded an EBITDA of about 37.8 million, and an adjusted EBITDA of about 60.4 million after deducting listing fees and non-recurring expenses in the online gaming business.

Referring to the profit contribution ratio for the first half of FY2023 and the second half of FY2023, the adjusted EBITDA expected for the full year of FY2024 is about 137.3 million; if the 1:1 ratio is applied, the estimated adjusted EBITDA for FY2024 is about 120.8 million. It means,The growth rate range of adjusted EBITDA for FY2024 may be between 41.4%-60.7%. This indicates that the company's rapid profit growth has not changed. Paragon is still in the “golden development period” with the best scale effect and the strongest sustainability in profit growth.

Belle Palace has good fundamentals. The balance ratio, which is one of the important financial indicators, recorded 30.5%, 23.4%, 18.1%, and 21.9% respectively in fiscal year 2021, fiscal year 2022, fiscal year 2023, and the first half of fiscal year 2024. Overall, it maintained a downward trend, indicating that the company's overall operating efficiency and resilience to risks are continuously improving in the general direction.

In addition to the continuous consolidation and improvement of the balance sheet brought about by rapid growth, as of the first half of fiscal year 24, the company's cash holdings exceeded bank loans, and was at the “real” level of net cash debt, which also showed excellent resilience to risks.“Low risk on the right hand, high growth on the left hand” is also a weight of why Paragon was able to cross safely during the global pandemic.

Information provided by Insight Consulting,Belle Palace's betting performance is far superior to the industry's comparable average. This is one of the core indicators for measuring whether a casino is in a leading position and whether it can gather popularity.As can be seen from the prospectus, Bellagio's yearly bet amount for each “slot machine” is about 12.5 million. Compared with the Czech casino industry average of 3 million, the company's performance in this data is about 316.7% higher; while the bet amount per table is about 7.2 million, compared to the average of 1.7 million in the Czech casino industry, the former is about 323.5% higher.

Whether based on its own operating results or in terms of industry comparisons, Paragon has put forward the best attitude to embrace the Hong Kong stock market.

As for the company's focus on future growth, online and offline businesses have their own points of interest.

The offline gaming business can be seen in the use of the company after raising capital. Paragon will buy more slot machines to expand the revenue scale of the gaming business. In addition, the company also bought a shopping mall in a prime location in the Czech Republic, located on the main traffic road connecting Vienna, the capital of Austria, and Brno, the second-largest city in the Czech Republic. It is expected to be converted into a casino in the future to further promote the concentration of offline gaming businesses in Europe and the consolidation of its leading edge.

Meanwhile, the company's online gaming business obtained a first-class gaming service license granted by the Malta Gaming Authority at the end of 2022. It is valid for 10 years, and has established a relatively complete system infrastructure for the online gaming platform.

Belle Palace revealed in its prospectus that it plans to conduct trial operation of the online gaming business in the first half of 2024, which also indicates that the company's online gaming business may have opened the door to a “second growth curve.”

3. Cornerstone investors are expected to provide help, and the online gaming business may shine brightly

It is worth noting that in the cornerstone investor list of Belle Palace, an institutional investor called Shangguoke International Technology Co., Ltd. (hereinafter referred to as “Shangguoke”), a private enterprise registered in Taiwan Province to provide slot machines and social games, was found. This private enterprise is directly and indirectly owned by Gu Gangwei and his spouse. Gu Gangwei is one of the ultimate beneficial owners and directors of Cornerstone Investors. It is also the chairman of the board of directors and CEO of Longzhong Network Co., Ltd. (hereinafter referred to as “Longzhong Network”), which is listed on the Taiwan Stock Exchange.

According to Longzhong Network's 2022 annual report, its revenue mainly comes from: providing online games and selling various services or virtual items in games; collecting license fees from its gaming platform services; and commissioning game software development.

In view of this, it can be believed that Gu Gangwei, who has rich industry experience in the game and entertainment industry, can greatly help promote the Belle Palace online gaming business platform and continue to iterate and upgrade technology in future cooperation. With strong shareholders' help, it is easier for Paragon to gain collaboration and resonance in business development. It is expected that its online gaming business will be well reported in terms of promotion in emerging markets, and opening up market space is just around the corner.

The author has always believed that in the future, Belle Palace's online gaming business will gradually become the biggest core variable that will change the company's fundamentals, and none of them. At the same time, the online gaming business will also become a “powerful tool” to permanently increase the company's long-term investment value and stock price valuation, and the company's “butterfly transformation moment” may appear along with the successful issuance of its new shares.