Next Tuesday, Shenzhen Longsys Electronics Co.,Ltd. (301308.SZ) will officially list on the Hong Kong Stock Exchange, becoming the first independent memory company in China to achieve a dual "A+H" share listing. This should have been a capital market celebration, but after the maximum H-share offer price of HK$240.60 was announced, the A-share secondary market erupted—the same company, two markets, yet a price gap of nearly half exists. This has left countless A-share investors feeling betrayed.

The sense of betrayal is likely even stronger for fund holders. Just one month ago, 21 institutions subscribed to a private placement of Shenzhen Longsys Electronics Co.,Ltd. A-shares at a high price of 560 yuan per share, including several public funds such as E Fund Management. Now, their paper losses have exceeded 30%. Behind the dramatic stock price swings lies a key question: how solid is Shenzhen Longsys Electronics Co.,Ltd.'s fundamentals in the first half of 2026, and what is the true quality of its 10-billion-yuan profit?

A-shares at 360 yuan, H-shares at a maximum of 206 yuan

The final H-share offer price for Shenzhen Longsys Electronics Co.,Ltd. has yet to be announced, but the ceiling was set in an August 31 announcement—no higher than HK$240.60 per share. Based on an exchange rate of 1:0.86, HK$240.60 is roughly equivalent to 206 yuan in RMB. Compared with the A-share closing price of 381.75 yuan on August 31, the maximum H-share offer price represents a discount of approximately 45%. This pricing gap has deeply unsettled many shareholders, and the core sentiment boils down to one phrase: we overpaid.

This issue should be examined from two angles. First, the investor structures, liquidity, and valuation systems of A-shares and H-shares are fundamentally different. An H-share IPO inherently requires a "discount to attract subscriptions." Shenzhen Longsys Electronics Co.,Ltd.'s global offering totals approximately 26.08 million shares, with 90% allocated to international placement and only 10% to the Hong Kong public offering. This means it is not facing domestic capital familiar with Shenzhen Longsys Electronics Co.,Ltd. or the A-share valuation system, but rather overseas funds, Hong Kong institutions, international long-term capital, and sovereign wealth funds. These investors typically do not directly adopt A-share valuations for a storage module company with strong cyclical characteristics. Therefore, the discount serves as a "safety cushion" to ensure a successful IPO.

However, while a deeper discount helps secure the H-share listing, it may also further widen the A-H valuation divergence. Second, and more importantly, the key is whether the H-shares can hold their offer price in the secondary market after listing. If Shenzhen Longsys Electronics Co.,Ltd.'s H-shares continue to decline post-listing, the market could interpret it as a stronger negative signal: international capital is not only unwilling to buy at A-share valuations, but even considers HK$240 too expensive. Only then would the pressure on A-shares become clearly amplified.

Judging by the secondary market's reaction, sentiment is pessimistic. Even before the H-share offering officially launched, significant capital had already fled. As of the September 3 close, Shenzhen Longsys Electronics Co.,Ltd.'s share price stood at 359.63 yuan, extending the previous day's decline; main capital has seen net outflows for three consecutive days; and the five-day net margin buying was -235 million yuan, indicating leveraged capital withdrawal.

Fund holders bear the burden while "insiders" cash out 4 billion yuan

The emergence of the maximum H-share price for Shenzhen Longsys Electronics Co.,Ltd. has likely shaken not only A-share retail investors but also many fund holders. Less than a month before the H-share offering began—on August 7—Shenzhen Longsys Electronics Co.,Ltd. completed a 3.7-billion-yuan A-share private placement at 560 yuan per share, issuing 6.6071 million shares to 21 investors, all with a six-month lock-up period. However, on the day the placement prospectus was disclosed, Shenzhen Longsys Electronics Co.,Ltd.'s closing price had already fallen to 386.60 yuan. The 560-yuan placement price represented a premium of about 45% over the market price that day, meaning all 21 subscribers faced paper losses exceeding 30% the moment they paid. As Shenzhen Longsys Electronics Co.,Ltd.'s stock has continued its steady decline recently, by the September 3 close, the institutions participating in the placement had paper losses exceeding 35%, with total combined losses surpassing 1.3 billion yuan.

Why are fund holders affected? Because one-third of these 21 investors are public funds: E Fund Management, Caitong Fund, Nuode Fund, China Southern Fund, Oriental Alpha Fund, China Asset Management, and GTJA Allianz Fund collectively received approximately 2.7934 million shares. Among them, E Fund Management was allocated 947,300 shares, the largest single-investor allotment. Based on today's closing price, the combined paper losses for these seven public funds amount to roughly 550 million yuan.

While fund holders are left stranded, Shenzhen Longsys Electronics Co.,Ltd.'s "own people" have cashed out over 4 billion yuan. A review of company announcements reveals that in the first half of the year, the top ten shareholders of Shenzhen Longsys Electronics Co.,Ltd. frequently reduced their holdings. The moves by Li Zhixiong, the second-largest shareholder and a director, were particularly notable. From May 12 to June 25, 2026, Li Zhixiong sold 2.3999 million shares through centralized auction trading at an average price of 575.69 yuan per share, cashing out approximately 1.382 billion yuan. Shareholder and Deputy General Manager Gao Xichun also reduced holdings in May at an average price of 540.77 yuan, netting 12.43 million yuan. Deputy General Manager Zhu Yu planned to reduce up to 598,400 shares between June 30 and September 29, 2026. Additionally, in January 2026, the pre-IPO employee shareholding platforms Longxi No.1, Longxi No.2, Longxi No.3, Longjian Management, and Longxi No.5 completed a negotiated transfer at 212.09 yuan per share, transferring a total of approximately 12.5744 million shares for a transaction value of about 2.667 billion yuan. Excluding Zhu Yu's not-yet-completed reduction plan, the "insiders" of Shenzhen Longsys Electronics Co.,Ltd. have already cashed out more than 4 billion yuan through transactions that have occurred this year.

Of course, share reductions do not necessarily imply a bearish outlook, nor do they mean reductions should be prohibited. For early employees and pre-IPO investors, cashing out after listing to realize wealth and protect interests is a common phenomenon in capital markets. However, when reductions, private placements, exits, and being trapped all coincide within the same cycle of high stock price volatility, investors naturally become more sensitive.

26 billion yuan in inventory: ammunition or dynamite?

Contrasting sharply with the recent steady decline in share price is Shenzhen Longsys Electronics Co.,Ltd.'s explosive performance in the first half of this year. In the first half of 2026, Shenzhen Longsys Electronics Co.,Ltd. achieved operating revenue of 24.088 billion yuan, up 136.26% year-on-year; net profit attributable to the parent was 10.577 billion yuan, up 71,528.66% year-on-year. In just half a year, Shenzhen Longsys Electronics Co.,Ltd. earned nearly eight times its total net profit for the full year of 2025. Gross margin surged from under 13% in the first half of 2025 to 58.9% in the first half of 2026.

The performance surge is driven by multiple factors: first, the global memory chip industry is in a "super cycle" in 2026, with accelerated AI data center construction driving up DRAM and NAND prices; second, the company's enterprise storage business revenue reached 2.14 billion yuan, up 208.80% year-on-year; third, Lexar's global revenue was 3.966 billion yuan, up 84.90%, and Brazilian subsidiary Zilia's revenue was 3.95 billion yuan, up 184.58%.

However, behind the impressive profit figures, three major concerns cannot be ignored. Concern one: operating cash flow has turned negative. Despite net profit exceeding 10 billion yuan, net operating cash flow in the first half was -3.151 billion yuan, compared with 693 million yuan in the same period last year. The company explained this was mainly due to increased cash payments for purchasing goods. Looking at a longer timeline, operating cash flow has been negative for three consecutive years from 2023 to 2025. Profit is "paper wealth"; cash is the real currency.

Concern two: inventory is towering, accounting for 60% of total assets. As of June 30, 2026, Shenzhen Longsys Electronics Co.,Ltd.'s inventory book value stood at 25.777 billion yuan, representing 60.12% of total assets, up 120.73% from 11.678 billion yuan at the end of 2025. The company has aggressively borrowed to build inventory at the peak of the industry cycle, essentially betting on continued memory price increases. However, this also means that once the memory cycle reverses, the 25.7 billion yuan in "ammunition" could turn into "dynamite."

Concern three: interest-bearing debt has surged. As of June 30, long-term borrowings reached 10.493 billion yuan, up 139.7% from the end of last year; short-term borrowings stood at 4.92 billion yuan, and non-current liabilities due within one year were 1.249 billion yuan, bringing total interest-bearing debt to approximately 16.661 billion yuan. The company's monetary funds were only 3.109 billion yuan, meaning short-term borrowings alone exceed its on-book cash. Financial expenses in the first half reached 438 million yuan, a sharp year-on-year increase.

For investors, at a time when memory prices may already be at their peak, whether to trust the current "10-billion-yuan profit" or be wary of the risks posed by "25.7 billion yuan in inventory" and "surge in interest-bearing debt"—the answer may not be as clear-cut as the revenue figures suggest.