A total of 49.73 million restricted shares of ZHIHUI MINING (02546) are about to be unlocked. Can the company, which is interlaced with high growth expectations and high valuations, withstand the new challenges?

Among the new stocks listed on the main board of the Hong Kong Stock Exchange in 2025, ZHIHUI MINING (02546) is one of the high-quality targets that has brought investors substantial gains. The company soared by over 90% on its first day of listing, and then reached a high of 21.98 Hong Kong dollars after 45 trading days, an increase of more than 387.36% from the issue price of 4.51 Hong Kong dollars, displaying the characteristics of a "monster stock". Although its stock price has subsequently fallen, it has remained at high levels with wide fluctuations. As of the close on May 29th, the stock was trading at 14.39 Hong Kong dollars, still showing a gain of over 219.07% from the issue price. However, as the time since listing approaches six months, ZHIHUI MINING is about to face the first "pressure test" in the capital market. It has been observed that 49.73 million shares held by two cornerstone investors introduced during the IPO of ZHIHUI MINING will be unlocked on June 19. It is worth noting that these 49.73 million shares account for 40.78% of the total global shares sold by the company and 10.19% of the total issued shares of the company. With more than double the profit in a short period of time, the intention of cornerstone investors to cash in on profits should not be underestimated. Once the restricted shares are unlocked and a concentrated sell-off occurs, it is almost a high probability event that the stock price will come under pressure in the short term. However, for investors focusing on the long-term growth logic of the company, whether panic selling will be a golden opportunity for a contrarian position is undoubtedly the most crucial proposition regarding ZHIHUI MINING at present. Three major factors resonate to drive the sharp rise in stock prices At the time of its listing, ZHIHUI MINING was a bright spot in the gloomy market sentiment of new stocks in the Hong Kong stock market. From December 17, 2024, to May 23, 2025, a total of 10 new stocks were listed on the main board of the Hong Kong Stock Exchange, with 7 of them breaking on the first day of listing, a break rate as high as 70%. The core of this situation lies in the tightening of liquidity at the end of the year, combined with a large supply of new stocks, resulting in intensified "grouping" of funds, with only a few stocks receiving favor and the overall market sentiment significantly cooling down. ZHIHUI MINING was undoubtedly a bright spot in this downturn. Faced with a high market break rate of 70%, it managed to enter the ranks of the three major targets that rose on the first day of listing, and continued to surge after a 90% surge on the first day, reaching a high of 21.98 Hong Kong dollars. And as of now, its increase rate still remains at over two-fold, making it the undisputed "leading sheep" among the 10 new stocks in this batch. In contrast, the other two stocks that performed well on the first day have already broken by now. ZHIHUI MINING's decent stock price performance on the first day of listing and thereafter can be mainly attributed to three factors: firstly, ZHIHUI MINING's overall "plate" is relatively small, and the low value of the public offering has triggered a rush by new subscribers. Data shows that ZHIHUI MINING sold a total of about 122 million H shares in the IPO, accounting for 25% of the company's total share capital of about 488 million shares, at an issue price of 4.51 Hong Kong dollars per share, which means the company's IPO market value is only 2.2 billion Hong Kong dollars, and the market value of the shares sold amounts to only 550.22 million Hong Kong dollars. It is worth noting that ZHIHUI MINING used mechanism B issuance, with 90% of the international placement and 10% of the public offering. This means that only about 12.2 million shares were sold publicly, with a market value of only 55.02 million Hong Kong dollars. With such a small value of public offerings, it naturally attracted a frenzy of retail investors, with oversubscription under the public offering reaching 5248.15 times. In contrast, the performance of international placements was relatively lackluster, with oversubscription of only 2.68 times. Secondly, ZHIHUI MINING has relatively few real circulating chips. In its IPO, ZHIHUI MINING introduced two cornerstone investors, Speclif International Limited and Greater Bay Area Home Investment Limited. The former subscribed to 32 million shares of ZHIHUI MINING, accounting for 26.24% of the total shares sold, while the latter subscribed to 14.54% of ZHIHUI MINING's shares. Together, the two cornerstone investors' subscribed shares account for 40.78% of the total shares sold. The shares held by the two cornerstone investors are subject to lock-up periods, which means that the actual number of freely tradable shares after ZHIHUI MINING's listing is only 72.24 million shares, with a corresponding market value of about 325 million yuan at the issue price. This "pocket circulating shares + high control plate expectation" chip structure makes the stock price very sensitive to buying pressure, as a small amount of funds can leverage a huge upward elasticity, providing an excellent soil for the rise of main funds. Thirdly, the significant improvement in fundamentals has laid a solid foundation for the continued strength of ZHIHUI MINING's stock price after listing. In 2024, due to maintenance and upgrades of two key production lines at the company's concentrator plant from May to October and a shortened production period in April due to adverse weather, ZHIHUI MINING's performance during the reporting period declined significantly. However, as shown in the prospectus, in the first seven months of 2025, thanks to the normal recovery of production operations, full-load production of the upgraded production lines at the concentrator plant, and improvements in mining and ore grades from external sources, this drove ZHIHUI MINING's performance to a strong recovery, with revenue increasing by 253.4% to 256.6 million yuan, and returning to profit from a loss, recording a profit of 51.7 million yuan. The "small-cap stock + low circulating chips + strong fundamental recovery" triple resonance that ZHIHUI MINING has demonstrated after listing is the core logic behind its sharp rise. However, the unlocking of cornerstone shares with over double the profit on June 19th will pose a new challenge, and whether the cornerstone investors with a total ownership of over 10% will cash in profits will be the most crucial variable determining the short-term trend of the stock. High growth expectations and high valuations intertwined, cornerstone exits or optimize risk-return ratio A review of historical cases shows that the decision of cornerstone investors to reduce their holdings mainly depends on the "profit realization threshold" and "fund attribute" in the two core dimensions of the game. From the perspective of absolute returns, ZHIHUI MINING's cornerstone investors have seen profits of over 200% in the six months, which not only reaches but far exceeds the expected return threshold of the vast majority of primary market equity investments. For financial-type funds, this is a difficult profit realization window to ignore and has a strong incentive for profit-taking. From the perspective of fund attributes, the market usually follows the rule of "financial capital timing, industry capital trend". Financial-based cornerstones (such as PE/VC backgrounds) are constrained by fund tenure and DPI (depth of investment dividend) pressure, and profit-taking at a high level is a natural closure of their business logic; while industry capital values long-term synergies and strategic positioning more, so their behavior is often more restrained. Based on the above logic, the judgment of the fund attributes of ZHIHUI MINING's cornerstone investors is particularly important. One of the cornerstones, Speclif International Limited, is an industry capital of the ZHAOJIN MINING system, and its subscription of ZHIHUI MINING has a strategic intention to position itself in the Tibetan resource circle, so the probability of selective lock-up is higher. The other cornerstone, Greater Bay Area Home Investment Limited, is a Hong Kong market-oriented investment fund platform with a background of central enterprises/local state-owned shareholders, structured as a PE fund (LP-GP), and faces real DPI pressure after a profit of over double, making "reducing holdings at highs and gradually exiting" more in line with the fund lifecycle. If the unlocking of cornerstone shares leads to a significant pressure on ZHIHUI MINING's stock price, it may be a key window for long-term investors to position themselves in ZHIHUI MINING. The future growth of ZHIHUI MINING depends on transitioning from a "recovery rebound" to "substantial volume growth", and the most direct momentum at present is the underground mine that was just accepted and put into commercial operation in June 2025. This highly anticipated No.12 ore body will not only increase the company's permitted mining capacity to an annual level of 400,000 tons, but also directly drive explosively high growth rates of zinc and lead production by 76% and 160% respectively in 2025; with the arrival of the first complete operational year in 2026, the volume dividend brought about by the capacity ramp-up will further be released, serving as a cornerstone to solidify the performance. However, simple capacity release cannot solve long-term physical bottlenecks, and the construction of the Phase II tailings pond is the key to unlocking the 31-year lifecycle ahead. The current tailings pond is expected to reach its limit in 2026, and the company has invested nearly 40 million yuan in the Phase II project, which, like the "sewer system" of the mine, will only ensure that the annual production capacity of 400,000 tons will not become a mere paper number due to environmental protection and storage restrictions, thus truly opening up a sustainable growth channel from the medium to long term. At the same time, the company is not stopping at simple expansion, and through technological upgrades such as X-ray pre-selection, the efficiency of ore recovery has been increased by over 50%, and as the proportion of high-grade underground mineral bodies in the future supply structure continues to rise, the output of silver, copper, and other high value-added by-product metals will continuously optimize the cost and profit structure, allowing profit growth to outpace production growth. On the basis of consolidating its core business fundamentals, ZHIHUI MINING is aiming to break the ceiling of a single mine by expanding through acquisitions, with the most typical move being the acquisition of a 60% stake in Tibet Dachuan Mining for 90 million yuan. This move not only extends the resource map from Nagqu to Changdu, but more importantly, it enters the high-priced metal tracks of copper, molybdenum, etc., which serves as a hedge against zinc price cyclic fluctuations and a signal of a transformation into a "multi-metal platform". When the certainty of reaching production meets the option of resource expansion, ZHIHUI MINING's valuation logic will also evolve. As of the close on June 1st, ZHIHUI MINING has a market value of 7.2 billion Hong Kong dollars, with a PE valuation of 41.62 times its 2025 net profit of 150 million yuan and a PB valuation of 3.83 times its 2025 profit of 1.633 billion yuan, significantly higher than the overall market value-weighted PE of the Hong Kong stock market's "metal mining/general metals and ores" sector at about 17-19 times, and PB of about 2.5-3.2 times. Therefore, ZHIHUI MINING is currently in a phase of intertwining "high growth expectations and high valuations". Because the current valuation has already priced in a significant portion of future expectations, coupled with hard constraints such as the tailings pond/environmental protection and the disturbance of unlocked chips, it is more like a "high-risk but requires hard validation" trade, rather than a "certain growth ticket". Hence, if a significant price fluctuation is caused by the unlocking of cornerstone shares, it may be an opportunity for investors to improve their "winning rate" - the digestion of valuation due to short-term selling pressure will significantly optimize the risk-return ratio (odds), pulling back the previously oversold expectations into a range with a safety margin, thereby substantially enhancing the certainty of long-term investment. However, the basis for the above logic depends on zinc, lead, copper and other core product prices remaining at least at high levels of volatility. Once metal prices show a trend of decline, not only will it directly erode profit margins, it will also severely hedge or even offset the incremental gains brought about by capacity release, resulting in a substantial impact on the company's expected performance release.