Delton Technology (Guangzhou) Inc. (DELTON) initiated its global offering on March 12, with pricing expected on March 18 and trading scheduled to commence on the Hong Kong Stock Exchange on March 20. The maximum offer price is set at HK$71.88 per share, with approximately 46 million shares available, representing a maximum fundraising size of HK$3.31 billion. As a leading global manufacturer of PCBs for computing servers, the company is entering the Hong Kong market with a nearly 50% discount and a strong lineup of cornerstone investors. While benefiting from its position in a high-growth industry and demonstrating resilient performance, the company also faces specific operational risks and a valuation that appears elevated compared to sector peers, raising questions about the alignment between its valuation and fundamentals.
As a core leader in the global computing server PCB sector, Delton Technology holds a prominent industry position. Based on cumulative revenue from 2022 to 2024, the company ranks third globally with total revenue reaching $640 million, establishing itself as a key player in China's computing PCB market. Driven by the rapid expansion of the AI industry since early 2025, demand for computing infrastructure remains robust, fueling a sustained upward trend in the company's share price. Since April 2025, the stock has surged nearly threefold, reaching an all-time intraday high of 127.88 yuan per share on March 11, just before the Hong Kong IPO announcement. Despite recent market volatility due to geopolitical factors, the stock has shown strong resilience, underscoring solid fundamental support.
Regarding pricing discounts, the maximum Hong Kong IPO price represents a discount of approximately 47.1% compared to the A-share closing price of 119.90 yuan on March 11, and nearly 49% below the pre-announcement closing price of 124.10 yuan. If the share price remains stable before final pricing, this could become the largest IPO discount in the Hong Kong market so far in 2026. The significant discount reflects several key considerations: first, the stock has just hit a historic high and has already tripled since April 2025, trading in a strong upward trajectory amid growing market discussions about potential AI industry bubbles, creating clear demand for a safety margin among institutional investors; second, the high-quality cornerstone investor lineup for this offering is notable among similarly sized deals, with an attractive discount aimed at drawing in further high-caliber investors.
The offering does not include an over-allotment option or a share issuance adjustment mechanism, aligning with the recent trend for A-to-H listings. Many companies are voluntarily omitting the greenshoe option, as shares can be included in the Hong Kong Stock Connect on the first trading day without it, allowing southbound capital inflows to provide stabilizing liquidity that traditionally came from the greenshoe mechanism. Recent examples such as Meig Smart Technology, Zhaowei Machinery, and Walcott Nuclear Materials, which launched without greenshoe options, all saw gains on their debut without breaking issue price, offering positive market precedents for Delton's listing.
In terms of cornerstone investment, Delton has attracted ten entities (on a consolidated basis) committing approximately $190 million, accounting for 44.9% of the base offering size. All participating institutions are well-known professional financial investors, resulting in a balanced and high-quality investor structure. Among them, four foreign long-term funds—UBS Global Asset Management, Value Partners,瀚亚投资, and Baring—collectively invested $85 million, representing half of the total cornerstone investment. Two Chinese private equity firms, 源峰基金 and景林, committed $60 million combined, while three domestic long-term funds—Greater Bay Area Fund, 大家人寿, and ICBC Wealth Management—invested $35 million in total. Foreign private equity firm My Alpha contributed $10 million. Unlike other recent A-to-H listings, the company did not bring in industrial investors, local government funds, or individual investors through resource swaps, relying solely on financial investors—a strong endorsement of its fundamentals by the capital markets.
Operationally, the company exhibits certain characteristics that, while stable, indicate potential risks. From 2022 to 2024 and the first three quarters of 2025, revenue from the top five customers accounted for 63.6%, 65.6%, 61.4%, and 59.3% of total revenue, respectively, while procurement from the top five suppliers represented 53.7%, 58.2%, 63.1%, and 59.8%, indicating relatively high and stable concentration in both customer and supplier relationships. Meanwhile, trade receivables and notes have risen in line with revenue growth, reaching 705 million yuan, 887 million yuan, 1.293 billion yuan, and 1.731 billion yuan at the end of 2022, 2023, 2024, and Q3 2025, respectively. Although the days sales outstanding have remained stable at 102–103 days for several years with no significant payment delays, continued monitoring of collection reliability and supply chain stability is warranted.
Overall, Delton demonstrates strong fundamental advantages, with both revenue and profits growing and key profitability metrics improving consistently. Revenue increased from 2.41 billion yuan in 2022 to 2.68 billion yuan in 2023 and 3.73 billion yuan in 2024, achieving a three-year compound annual growth rate of 24.4%. Bolstered by robust demand for computing infrastructure, revenue for the first three quarters of 2025 reached 3.84 billion yuan, up 43.1% year-over-year, highlighting vigorous growth momentum. Profit performance has been even more impressive, with net profit attributable to shareholders rising from 280 million yuan in 2022 to 410 million yuan in 2023 and 680 million yuan in 2024, reflecting a three-year CAGR of 55.5%. For the first three quarters of 2025, net profit was 180 million yuan, with full-year 2025 guidance projected between 980 million yuan and 1.02 billion yuan. Profitability has also strengthened, with gross margin climbing from 26.1% in 2022 to 34.8% in the first three quarters of 2025, and net margin increasing from 11.6% to 18.7% over the same period, indicating steady improvement in core earnings metrics.
However, from a valuation perspective, the Hong Kong IPO pricing appears somewhat elevated compared to A-share peers, creating a premium that challenges investment rationale—since true investment value depends not only on solid fundamentals but also on reasonable valuation levels. Specifically, Delton's issuance market cap corresponds to a 2025 P/E ratio of 54.1 times and a forecasted 2026 P/E of 36.3 times, with the 2025 multiple slightly above the average for comparable A-share companies and the 2026 forecast ranking highest among peers. In terms of scale, comparable A-share firms significantly outperform Delton in both revenue and net profit, suggesting a lack of scale-based justification for the valuation premium. This discrepancy is even more pronounced using the PEG metric: Delton's 2025 and 2026 PEG ratios stand at 1.1 and 0.7, respectively, notably higher than most A-share comparables, primarily because its profit growth does not provide a distinct advantage. For instance, industry leaders like 胜宏科技 and 深南电路 exhibit stronger profit growth with lower PEG ratios, while only 沪电股份 shows slightly slower growth but still maintains a lower PEG than Delton's 2025 level. Crucially, as a smaller player, high growth should be the central thesis for justifying a premium valuation. However, with competitors expected to maintain strong growth in 2026 while Delton's growth fails to significantly outpace them, the "growth premium" argument weakens, exacerbating concerns about its current valuation levels.
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