[Analysis] When will Zhipu be included in the Hang Seng Index constituent stocks?

Zhipu (02513) was only listed on January 8 this year. Its cumulative increase in the first half of the year reached 17 times, making it the top new stock in Hong Kong stocks. However, when will Zhipu become a blue-chip stock?

According to the Hang Seng Index calculation rules, the requirement for becoming a Hang Seng Index constituent is that the stock must be listed for at least 3 months. Therefore, as of the quarterly review at the end of March, it had still not become a blue-chip candidate list.

Therefore, when the quarterly review as of the end of June takes place, it has a strong chance of becoming a blue-chip stock.

Cornerstone investors’ six-month lock-up period

However, although Zhipu’s H-share market capitalization reaches HKD 465.6 billion, its free-float market capitalization is only 8% (roughly the number of shares issued at the time of listing). As a result, even if it were included in the Hang Seng Index, only a free-float market capitalization of HKD 37.3 billion would be counted, ranking between Cheung Kong Infrastructure (01038) and China Unicom (00762). The estimated index weighting would be about 0.3%.

It is worth noting that Zhipu’s current public float is far below 8%, at only 11.74 million shares or 2.7%, because 5.83% of the shares (25.6816 million shares) are held by cornerstone investors. The lock-up period for cornerstone investors is 6 months, meaning they will be released on July 7.

Pre-IPO investors’ one-year lock-up period

After 1 year since listing, Zhipu’s importance in the index is expected to surge, because the 1-year lock-up periods for the controlling shareholder, the Lead Prime senior independent investors, and cornerstone investors will have expired. For example, the controlling shareholder holds 30%, Juneyoung Capital holds 6.16%, and Meituan holds 3.9%.