On September 8th, storage module leader Longsys Electronics officially listed on the Hong Kong Stock Exchange, achieving dual "A+H" listing status. However, the debut day played out a script of "breaking the issue price." During trading, Longsys dropped below its HKD 236 issue price, hitting an intraday low of HKD 232.4. At the time of writing, the stock was down 0.59% at HKD 234.6, with a total market capitalization of HKD 106.919 billion.
Today, Longsys's A-shares opened with volatility before climbing back during the session. At the time of writing, the share price was up over 1%, trading at RMB 364.24, with a total market value of RMB 156.5 billion. However, since July, the A-share price has nearly halved from its historic high near RMB 750.
The Hong Kong Debut Fails to Ignite Enthusiasm
As a leading domestic storage company, Longsys issued a total of 26.0778 million H-shares globally. This included 2.6078 million shares for the Hong Kong public offering, 23.47 million shares for the international placement, along with an over-allotment option. The final issue price was set at HKD 236, with net proceeds of approximately HKD 6.8 billion. Each board lot consists of 50 shares, with an entry fee of approximately HKD 12,151.32. The raised funds are primarily earmarked for AI high-end memory research and development, main controller chips, and advanced packaging and testing.
From subscription data, the Hong Kong public offering was oversubscribed by 40.32 times, while the international placement saw 3.88 times subscription. Additionally, 14 industrial capital investors, including Transsion, Lenovo, TCL Technology, and Lens Technology, were introduced as cornerstone investors, alongside domestic and international asset management institutions such as CITIC Asset Management Hong Kong and Wind Sabre. Together, they subscribed for approximately USD 151 million (about HKD 1.185 billion) worth of shares, accounting for 18.89% of the total offering shares.
Notably, Longsys's significant AH price gap has sparked heated market discussion. By the close on September 7th, Longsys's A-shares were trading at RMB 358.22 per share. The H-share issue price of HKD 236 (approximately RMB 202) represented nearly a 40% discount to the current A-share price.
Market Controversy Beyond the AH Discount
Market disputes go beyond just the AH premium issue. Just over a month ago, Longsys completed an A-share private placement, raising RMB 3.7 billion at RMB 560 per share, with several leading public funds participating. At that time, the placement price was approximately 45% higher than the closing price of RMB 386.60 on the issue day. In contrast, the HK listing price was more than double the placement price for H-shares. Within just two months, the significant disparity in equity prices across different channels has put many institutions that participated in the placement under water, becoming a focal point of market discussion.
Additionally, before the A-share issuance, there were signs of shareholders cashing out. According to previous announcements, shareholder and director Li Zhixiong, citing personal funding needs, reduced his holdings by nearly 2.4 million shares between May 12, 2026, and June 25, 2026, at an average price of RMB 575.69 per share, representing 0.56% of total share capital. Based on these calculations, Li Zhixiong cashed out approximately RMB 1.38 billion near the market's peak.
Record Profits Yet HK Investors Remain Cautious?
Founded in 1999, Longsys listed on the Shenzhen Stock Exchange in August 2022. The company specializes in the R&D, design, and sales of Flash and DRAM storage products. It does not engage in wafer manufacturing, purchasing necessary storage wafers and main controller chips from IDM and chip suppliers. It owns three brands: FORESEE, Lexar, and Zilia, with product lines covering embedded storage, solid-state drives, mobile storage, and memory modules. Its customer base spans consumer electronics, communications, automotive, medical, and energy sectors, including Samsung Electronics, Xiaomi, Dell, and Amazon.
In 2025, Longsys captured a 1.2% market share of the global storage product market. According to CIC Consulting data, based on 2025 storage product revenue, the company ranks as the ninth-largest memory manufacturer globally, the second-largest independent semiconductor memory vendor among over 100 global market participants, and the largest independent storage manufacturer among China's more than 30 market players.
Contrasting the HK listing's share price slump is a stellar half-year report. Financials show that in the first half of 2026, Longsys generated revenue of RMB 24.088 billion, a substantial year-over-year increase of 136.26%. Net profit attributable to shareholders reached RMB 10.577 billion, an increase of over 71,500 times year-on-year. Gross margin surged to 58.2% from 11% in the same period last year, while net cash flow from operating activities decreased by 554.82% year-on-year. In the first half, enterprise-grade storage revenue reached RMB 2.14 billion, up 208.8% year-on-year, and the gross margin for storage products was 59.08%, a year-on-year increase of 45.8%.
The stellar performance, however, failed to bolster the share price on its HK debut. Market analysis suggests three key reasons for this. First, A-shares view the company as an AI growth stock, while HK investors see a cyclical stock. The A-share market defines Longsys as a leader in the AI storage track, assigning a growth stock valuation that emphasizes the long-term growth potential of AI servers and automotive-grade storage. In contrast, HK investors are more wary of the cyclical nature of the storage industry, worrying that the current high profits represent a peak in the industry cycle that will be hard to sustain long-term.
Second, there are concerns about high inventory levels and the associated cyclical risk. Financial reports show that as of the end of June 2026, the company's book value of inventory stood at a massive RMB 25.777 billion, accounting for over 60% of total assets. This substantial inventory is the source of the current high margins but also plants the seed for potential cyclical reversal risk, making HK funds particularly cautious.
Third, there is a natural difference in valuation systems between the AH markets. Discounts on H-shares relative to A-shares are common, but the discount rate of around 40% has still sparked considerable debate. HK investors place more emphasis on cash flow and risk premiums, actively applying a valuation discount to highly volatile semiconductor cyclical stocks rather than simply following A-share valuation levels. Furthermore, pre-listing concerns over executive share reductions further dampened sentiment for the new listing.
Comments