Shenzhen Longsys Electronics Co., Ltd. (301308.SZ, 09976.HK) announced on the evening of September 4 that the final price for its H-share offering was set at HK$236 per share. On September 7, the company's A-shares rose 3.23% to close at RMB 358.22 per share. The H-share issue price of HK$236 (approximately RMB 202) represents just 56.5% of the current A-share price, and only 36% when compared to the A-share placement price of RMB 560. Over the past two-plus months, Longsys' A-share price has been cut in half.
Industry insiders suggest that given the recent spate of new listings breaking their issue prices in Hong Kong, Longsys' pricing reflects a negotiation outcome with overseas institutions. The valuation is considered relatively conservative overall, and it is expected that the stock may not drop below its issue price in the short term after listing. Additionally, Longsys recently completed both an A-share placement and a Hong Kong IPO, conducting two capital raises within less than three months, which signals substantial funding needs. A month has passed since the buyback plan was announced on August 7, yet the company has still not put the plan into action. Can the Hong Kong listing "hold" its issue price?
In its prospectus, Longsys states that it is an independent brand semiconductor memory manufacturer that procures memory wafers and controller chips from IDM and controller chip suppliers, and does not engage in wafer manufacturing. The H-shares are expected to be listed and begin trading on the Main Board of the Stock Exchange of Hong Kong on September 8, 2026. Without considering the offering adjustment right and the over-allotment option, Longsys will issue 26 million H-shares, accounting for approximately 5.72% of the total shares after issuance. At an issue price of HK$236 per share, the listing is expected to raise nearly HK$6.2 billion (approximately RMB 5.3 billion).
Li Zeming, Chief Investment Officer of Blue Water Capital Management Limited, told Yicai that the Hong Kong new share market has been weak recently. Since July, around 20 new stocks have listed in Hong Kong, with more than half breaking their issue prices on the first day. "In this context, Longsys is choosing to list now, and given its relatively large market cap, there is limited room for negotiation with overseas institutions, making it difficult to secure a higher price. This has led to a relatively conservative pricing, which should help stabilize the stock price after listing. As long as the market environment doesn't suddenly deteriorate, the probability of the Hong Kong stock price staying above the issue price is relatively high," he said.
Earlier, on August 7, Longsys released its A-share placement report, issuing 6.6071 million shares to 21 investors to raise a total of RMB 3.7 billion, with a lock-up period of six months. The placement price was set at RMB 560 per share (based on a pricing reference date of June 29, not lower than the average price of RMB 452.9 over the previous 20 trading days). Some shareholders had already cashed out before the A-share placement. According to announcements, shareholder and director Li Zhixiong, citing personal funding needs, reduced his holdings by nearly 2.4 million shares, representing 0.56% of total share capital, between May 12, 2026, and June 25, 2026, at an average price of RMB 575.69 per share. Based on this, Li Zhixiong cashed out approximately RMB 1.38 billion at market highs.
Still short of cash? The buyback plan announced a month ago has yet to be implemented. On August 7, Longsys approved a proposal to repurchase company shares. The company agreed to use no less than RMB 400 million and no more than RMB 800 million of its own or self-raised funds (including special loan funds for share repurchases) to repurchase some of its shares through centralized bidding transactions, for use in equity incentives or employee stock ownership plans. The repurchase price is capped at RMB 735 per share, with an implementation period of 12 months. However, nearly a month later, Longsys announced on September 3 that as of August 31, 2026, the company had yet to begin the share repurchase. The company stated it would proceed with the buyback within the specified period based on market conditions.
The market remains concerned about Longsys' financial strain. In the first half of 2026, Longsys reported net cash outflows from operating activities exceeding RMB 3.15 billion. Despite the industry's high prosperity, this figure failed to turn positive. In its interim report, the company explained, "This is mainly due to an increase in cash paid for purchasing goods and receiving labor services." As of June 30, 2026, the company's inventory book value stood at RMB 25.777 billion, accounting for 60.12% of total assets. The company emphasized the need to increase stockpiles during the "upward cycle": "As the overall business scale grows, period-end inventory levels are large and growing rapidly, and may further increase as operations expand. Given that customer orders typically increase during an upcycle, procurement volumes usually rise, and inventory levels generally increase to support higher demand by building up stock. The company also stated that the growth in inventory scale matches the expansion of business scale."
What happens if a "downcycle" hits? Under "risk factors," Longsys noted that it makes provisions for inventory write-downs based on the difference between net realizable value and cost each year. In the future, if there is a significant adverse change in market supply and demand, substantial fluctuations in raw material prices, a sharp decline in product market prices and gross margins, technological iteration leading to lagging behind the mainstream, declining demand or obsolescence of products, or inventory buildup, the company would face the risk of inventory write-down losses. Longsys stated that most memory products are essentially similar to commodities, with low supply elasticity, and memory wafer manufacturers have limited flexibility to adjust capacity in the short term. Therefore, memory product prices can change rapidly with shifts in customer demand.
Currently, Longsys' A-share price is in a "halved" state compared to its historical high of nearly RMB 750 in early July. Some market participants believe the memory industry has strong cyclical characteristics. Based on the current fundamentals, the memory sector is experiencing high prosperity due to AI development, but the stock price has already corrected significantly, and the company has still not initiated its buyback. If both fundamentals and the stock price continue to decline noticeably in the future, entering a so-called "downcycle," there remain questions about how the company will implement the buyback.
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