TIANYU SEMI initiated its global offering on November 27 and is expected to list on the Hong Kong Stock Exchange on December 5. The IPO is priced at HK$58.00 per share, with a base offering of 30.07 million shares, expandable to 34.58 million shares if the greenshoe option is exercised, translating to a total issuance size of HK$1.74–2.01 billion. CITIC Securities serves as the sole sponsor, with CICC, CMB International, and GF Securities as joint global coordinators. Thirteen other brokerages act as joint bookrunners, bringing the total underwriters to 17.
**Valuation Soars 50% in a Year with P/S Ratio Exceeding 40x, Yet Weak Institutional Support** Since 2021, TIANYU SEMI has completed seven rounds of financing and equity transfers, raising a cumulative RMB1.464 billion. Its valuation skyrocketed from RMB900 million in 2021 to RMB15.2 billion in November 2024—a 17-fold increase. The current IPO valuation stands at HK$22.8 billion, marking a 50% jump from the previous round. However, its 2024 price-to-sales (P/S) ratio of 40x far exceeds peers like SMIC (7.8x) and Hua Hong Semiconductor (7.1x), lacking fundamental justification. The company’s volatile revenue and profitability, coupled with mounting inventory and receivables pressures, raise concerns about its lofty valuation, which remains unsupported by broad institutional interest.
Only two cornerstone investors—Guangdong Primitive Forest and Glory Ocean—participated, committing HK$160 million (9.3% of the offering), well below the typical 40%+ seen in recent Hong Kong IPOs. Notably, neither has prior cornerstone investment experience, undermining market confidence. Guangdong Primitive Forest is linked to TIANYU SEMI’s pre-IPO investors, while Glory Ocean is a newcomer to Hong Kong IPO investments since 2024.
**Liquidity Risks Loom as H-Share Structure Limits Stock Connect Eligibility** As an H-share listing, TIANYU SEMI’s market capitalization eligible for Stock Connect falls below HK$4 billion, far short of the HK$10 billion threshold. This exclusion may exacerbate liquidity challenges post-listing, compounding valuation concerns.
Underwriter Livermore’s track record adds uncertainty. Its past projects, such as Haiwei Holdings (which plunged 23% on debut), often relied on retail investor hype amid tepid institutional demand, raising fears of a "pump-and-dump" scenario.
**Sales Jump 180% YoY in 2025, but Price Cuts and Inventory Overhang Weigh on Revenue** Operationally, TIANYU SEMI’s instability is evident. Revenue swung from RMB437 million (2022) to RMB1.171 billion (2023) before crashing to RMB520 million (2024), while net profit nosedived from RMB95.9 million (2023) to a RMB500 million loss (2024). A RMB9.5 million profit in May 2025 failed to offset a 13.6% revenue decline, highlighting weak sustainability.
Despite a 180% surge in epitaxial wafer sales (162,826 units) for the first nine months of 2025—driven by 90% and 972% growth in 6-inch and 8-inch products, respectively—the gains stemmed from price cuts and inventory clearance rather than organic demand. Average selling prices (ASPs) plummeted: 6-inch wafers dropped 67.4% from 2022’s RMB9,631 to RMB3,138, while 8-inch ASPs fell below industry forecasts (RMB10,000–12,000) to RMB8,377.
Inventory pressures persist. After a RMB352 million write-down in 2024 (65.8% of total inventory), aging stock (64.7% over one year old as of May 2025) forced aggressive clearance in Q3 2025, with utilization rates hitting 90.3% (4-inch), 91.3% (6-inch), and 86.0% (8-inch). This fire-sale approach further eroded ASPs, creating a vicious cycle.
**Cash Flow Strains and Receivables Risks** Mounting receivables and inventory dragged cash conversion efficiency to just RMB61.09 million from RMB257 million revenue in the first five months of 2025. A RMB564 million bad debt provision in 2024 (27.6% of receivables) and lingering risks from struggling clients add to the woes.
With operating cash flow insufficient to cover heavy capex (RMB-5.1 billion to RMB-10.9 billion annually from 2022–2024), TIANYU SEMI relies on external financing. The IPO’s HK$1.67 billion net proceeds offer temporary relief, but without sustainable revenue growth and operational improvements, liquidity risks remain acute.
In summary, TIANYU SEMI’s IPO faces headwinds—disconnected valuation, liquidity constraints, and operational instability—demanding cautious investor scrutiny.
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