The Valuation Puzzle of Longsys
Jiangbolong, a Chinese semiconductor company specializing in memory products, is facing a valuation conundrum amid the launch of its H-share listing. In early September, its H-share IPO price was set at HK$236 (~¥204), a roughly 40% discount to its A-share closing price of ¥347 on the same day. This follows a ¥3.7 billion A-share private placement in August, priced at ¥560 per share—a significant premium to the market price at the time. Investors from that placement now face paper losses of nearly 38% based on the current A-share price.
This valuation puzzle unfolds against the backdrop of staggering financial results. In the first half of 2026, Jiangbolong's revenue soared 136% year-over-year to ¥24.1 billion, while net profit attributable to shareholders skyrocketed over 71,500% to ¥10.6 billion. This explosive growth is attributed to the company's positioning at an inflection point in the memory chip cycle, benefiting from rising prices driven by demand from AI servers and high-performance computing.
The company operates as a "memory product company," focusing on design, firmware, packaging, and brand management (with brands like FORESEE and Lexar) rather than capital-intensive wafer fabrication. While this model offers high profit elasticity during industry upswings, it also exposes Jiangbolong to inventory risks and price volatility from upstream suppliers. As of June 2026, its inventory stood at approximately ¥25.8 billion, highlighting that its profits are closely tied to cyclical price movements.
The market is now grappling with three distinct price points for Jiangbolong: the ¥560 private placement price (representing bullish "future" expectations), the ¥347 A-share market price (reflecting "present" sentiment), and the ~¥204 H-share price (potentially a more fundamentals-based valuation stripped of A-share premium and cyclical optimism). This disparity underscores the core question: how should a company with spectacular but potentially cyclical profits be accurately valued?
marsbit09/08 04:01
