On February 11th, the share price of 160 HEALTH (02656) experienced a sudden sharp decline after approximately one hour of low opening and fluctuation. Within half an hour, the company's stock plummeted from around HKD 90 to a low of HKD 55, with an intraday price fluctuation nearing 40%. The stock ultimately closed down 30.73% for the day. This price movement erased most of the gains achieved earlier in the year, and the company's total market capitalization briefly fell below HKD 20 billion.

This performance by 160 HEALTH's stock price may remind investors of Huaren Bio, which listed at the end of last year. Huaren Bio-B (02396) officially began trading on December 22nd. As a company that adopted the "Mechanism B" IPO structure, Huaren Bio performed poorly on its first day, closing at HKD 27.00, a decline of 29.32. Despite being touted as a promising "innovative medicine" opportunity due to its status, its debut fell short of many investors' expectations.

Reviewing the IPO structure, Huaren Bio utilized a "Mechanism B + No Cornerstone Investors" approach, relying heavily on institutional investors for market anchoring. In hindsight, this strategy might appear aggressive for a pre-revenue biotech company, but for Huaren Bio at the time, it was a path previously pioneered by 160 HEALTH.

A comparison of the IPO structures of Huaren Bio and 160 HEALTH reveals significant similarities. Following the Hong Kong Stock Exchange's new IPO rules implemented last August, many companies have minimized their public offering portion to the 10% lower limit. This artificially creates a highly restricted float and establishes a shareholder base dominated by institutional, anchor, and cornerstone investors, aiming to stabilize the stock price post-listing.

Both 160 HEALTH and Huaren Bio opted for the "Mechanism B" framework combined with a "No Cornerstone Investors" plan, relying solely on a greenshoe option for stabilization. Consequently, with 90% of shares allocated internationally and no cornerstone investors providing a lock-up, the offering depended almost entirely on institutional investors for price support.

According to its issuance plan, 160 HEALTH offered 33.6455 million shares globally. The Hong Kong public offering constituted approximately 10%, while the international offering made up about 90%, with an additional 15% over-allotment option. The final offer price was set at the lower end of the range, HKD 11.89 per share, raising approximately HKD 500 million.

Despite both companies choosing Mechanism B and pricing at the lower end of their ranges, they achieved vastly different initial trading outcomes. Huaren Bio saw a modest 5.76% gain in its gray market but fell nearly 30% on its first trading day. In contrast, 160 HEALTH surged over 140% in the gray market and closed up 137.34% on its debut.

Prior to February 11th, 160 HEALTH was widely regarded as a success story for the Mechanism B model. Following its nearly 140% debut surge, the stock price did not experience a significant pullback but instead trended upwards with volatility. On February 10th, the share price even reached HKD 92.85, a record high since listing, representing a nearly 7-fold increase from the IPO price.

Subsequently, 160 HEALTH qualified for inclusion in the Hong Kong Stock Connect scheme. Its average market capitalization during the review period was HKD 15.218 billion, significantly exceeding the HKD 9.247 billion threshold required for entry, with formal inclusion scheduled for March.

Notably, liquidity assessment values for 160 HEALTH during the four-month review period were 0.34%, 0.34%, 0.29%, and 0.26% respectively. These figures, while meeting the requirement, remained consistently below 0.5%, highlighting the stabilizing effect of long-term and strategic anchor investors on the stock's price.

On February 5th, Huasheng Securities initiated coverage on 160 HEALTH with a "Buy" rating and a target price of HKD 150.15, implying roughly 69.57% upside from the prevailing price at the time. Technically, although the price had moved below the upper Bollinger Band after January 19th, it continued to fluctuate within the mid-to-upper band range, suggesting controlled price action by major holders. The absence of any recent negative company announcements makes the heavy sell-off on February 11th appear as a sudden, unexpected event.

Trading volume on that day exceeded 2 million shares, marking only the second time since listing that daily volume surpassed that level. Considering the high price level and the substantial volume, the sharp decline suggests the possibility of institutional investors taking profits.

Interestingly, large order net inflows amounted to nearly HKD 50 million on February 11th, with single large orders accounting for HKD 37.8057 million, or 30% of the activity. Outflowing funds were not dominated by large block sales but rather consisted of numerous smaller orders totaling nearly HKD 25 million.

Typically, a significant net inflow from large orders during a sharp price decline can sometimes indicate potential "wash trading," where large buy orders create an illusion of strong demand to attract followers, while selling is executed discreetly via smaller orders, ultimately contributing to the price drop.

Analysis of broker trading data shows the top three net buyers were Futu Securities, JP Morgan, and Huafu Jianye, with net purchases of 75,000 shares, 12,000 shares, and 10,000 shares respectively. The top three net sellers were Huatai, Inlik, and Huasheng, with net sales of 401,000 shares, 211,000 shares, and 164,800 shares respectively. The volume sold by the top net sellers far exceeded the volume bought by the top net buyers. Notably, Huasheng and Inlik were both joint bookrunners and joint lead managers for 160 HEALTH's initial public offering.