Breaking the record set by Mao Kee Holdings (01716.HK) seven years ago, folding bicycle manufacturer DAHON TECH (02543.HK) has become Hong Kong's new "oversubscription king" with 6,688 times oversubscription.

In recent years, the rise of outdoor sports has driven the development of related industries. According to the prospectus, based on 2024 folding bicycle retail volume, DAHON TECH holds a 26.3% market share in mainland China's folding bicycle industry; by retail value, the company commands a 36.5% market share.

However, can the capital market's enthusiastic pursuit match the company's fundamentals? Behind the high-growth financial data, concerns such as multiple pre-IPO dividend distributions and unclear diversification paths add uncertainty to this "oversubscription king's" future performance.

**Large Dividend Distributions Before Listing**

As a leader in the folding bicycle segment, DAHON TECH achieved revenues of 254 million yuan, 300 million yuan, and 451 million yuan from 2022 to 2024 respectively, representing a compound annual growth rate of 33.1%. Net profits were 31 million yuan, 35 million yuan, and 52 million yuan respectively, with both revenue and profit growing year-over-year.

Regarding IPO fundraising purposes, DAHON TECH plans to allocate approximately 30% of proceeds (about 103 million HKD) toward production system modernization and operational expansion. Specifically, the company expects to invest about 65 million HKD in establishing new production facilities in Huizhou, scheduled to commence operations in Q1 2027 with initial annual capacity of approximately 200,000 units.

Additionally, DAHON TECH plans to allocate another 30% of funds (about 103 million HKD) toward strengthening distribution networks and strategic brand development.

Notably, DAHON TECH conducted multiple dividend distributions before listing. The prospectus reveals that during the reporting period from 2022 to the first four months of 2025, the company distributed cumulative dividends of approximately 60 million yuan to shareholders. Founder Han Dewei directly holds about 88.56% of shares, plus controlling 1.6% through employee stock platform DAHON TECH Enterprise Limited Partnership, totaling 90.16% control of the company.

The highly concentrated ownership structure makes Han Dewei the primary beneficiary of dividend distributions. The practice of planning IPO fundraising while conducting large dividend distributions has raised market questions about the IPO's rationale.

"Large dividend distributions followed by IPO fundraising may indeed raise questions about IPO rationale, especially when major shareholders benefit significantly. This behavior might reflect sufficient cash flow while still seeking external funding for expansion, or indicate shareholder monetization intentions. Investors should focus on the reasonableness of fundraising purposes and corporate governance transparency. If funds are used for capacity expansion, R&D, or market development for long-term growth, it would be reasonable; otherwise, it might affect market confidence," private wealth manager Wu Suwei commented.

On its listing debut, DAHON TECH continued the enthusiasm from grey market trading with a "high opening." On September 9, the stock surged nearly 40% in early trading but closed with gains narrowed to 14.95%, achieving a turnover rate of 104% and total market capitalization of 1.802 billion HKD. On September 10, DAHON TECH's share price declined continuously after opening, closing down 8.96%. On September 11, DAHON TECH closed down 2.7% at 50.4 HKD.

Looking at historical "oversubscription kings," most exhibit "listing day as peak" patterns. Mao Kee Holdings' share price soared over 20 times on its listing debut, reaching a high of 11.62 HKD. However, it failed to maintain that glory and became a penny stock. As of September 11, Mao Kee Holdings trades at 0.58 HKD with total market capitalization of approximately 157 million HKD.

Lin Xianping, Executive Deputy Secretary-General of China Urban Expert Think Tank Committee, noted that Hong Kong "oversubscription kings'" post-listing performance is often influenced by market sentiment, company fundamentals, and industry prospects. Compared to companies like Mao Kee Holdings primarily engaged in media business, DAHON TECH operates in physical manufacturing, and its growth trajectory may depend more on industry demand and operational efficiency. Investors should rationally view short-term enthusiasm versus long-term value.

**Breaking Through Niche Market with Uncertain Prospects**

According to Daxue Consulting data, by retail volume, the global bicycle industry's market size grew from 165 million units in 2019 to 179 million units in 2024, representing a compound annual growth rate of 1.7%. By retail value, the global bicycle industry's market size increased from 266.1 billion yuan in 2019 to 432.7 billion yuan in 2024, with a compound annual growth rate of 10.2%.

However, folding bicycles remain a niche segment within the overall bicycle industry despite rapid growth, with consumer acceptance lower than traditional bicycles. By retail value and volume, folding bicycles accounted for 5.3% and 2.1% respectively of the entire industry in 2024.

Based on 2024 folding bicycle retail volume, DAHON TECH holds a 26.3% market share in mainland China's folding bicycle industry; by retail value, the company commands a 36.5% market share.

Beyond folding bicycles, DAHON TECH is attempting diversification, stating in its prospectus: "Our product portfolio has evolved from folding bicycles to other bicycle types, including road bikes, mountain bikes, children's bicycles, and e-assist bicycles."

However, currently, products other than folding bicycles have not shown significant progress. From 2022 to 2024, DAHON TECH's folding bicycle sales were 144,700, 153,900, and 224,600 units respectively, contributing revenues of 229 million yuan, 282 million yuan, and 431 million yuan, accounting for 96.6%, 97.7%, and 97.4% of bicycle sales revenue respectively.

Zhang Yue, Chairman of Aoyou International, analyzed that the folding bicycle market's small scale limits DAHON TECH's growth space, facing constraints from low market ceiling, intensifying competition, and changing consumer preferences. The company should: first, strengthen technological innovation to enhance product differentiation and premiumization for market share expansion; second, expand international markets, especially high-demand regions like Europe and America; third, develop related diversified products such as electric folding bicycles to capture trends; fourth, strengthen brand marketing to improve consumer awareness and loyalty, mining greater potential in niche markets.

From "oversubscription king" to true "long-distance champion," DAHON TECH still needs to prove itself to the capital market.