[HK IPO] Junzheng Shares Subscription Status and New Share Issuance Analysis

Company Name: Beijing Ingenic Semiconductor Co., Ltd. (03223.HK, hereinafter referred to as "the Company") $INGENIC(03223.HK)

Sponsor: Guotai Junan Securities

Greeshoe: Yes (Guotai Junan)

Cornerstone Investors: 46.75%

Subscription Period: Aug 17 - Aug 20 (Thursday morning this week)

Main Business: Supplier of memory, computing, and analog chips

I. Sponsor, Greeshoe, and Cornerstone Investors

Guotai Junan is the sole sponsor with the greeshoe mechanism. Since 2024, Guotai Junan has sponsored three AH-share listings; Cambridge Express stood out, while the other two were mediocre. They also served as the price stabilizer for Longpan, but the first-day decline widened, indicating a failure to stabilize the price.

The cornerstone investor allocation stands at 46.75%, featuring a decent lineup including GF Securities, ICBC Wealth Management, High-Flyer, and Junyi. While not an all-star roster like Zhongji Innolight's, it is still respectable.

IPO Rating: ★★★

II. Order Book and Margin Financing Status

Mechanism B, 10%, public allocation of 31,000 lots, at HKD 14,000 per lot.

As of 2 PM today, the margin financing multiplier reached 130x, with a total amount of HKD 41.74bn. The heat is not bad, likely due to a "revenge spending" effect after a long drought of new IPOs.

IPO Rating: ★★★★

III. Valuation Assessment and Fundamental Analysis

I wrote about this in mid-July, so I'll keep the summary brief today.

1. The three main business segments are dominated by memory chips, accounting for 65.3%, primarily DRAM, with specific breakdowns as follows.

2. The company focuses on high-end niche memory. Automotive-grade memory accounts for ~46% of the memory segment and ~28% of total revenue. Notably, Ingenic holds the #1 global market share in automotive-grade high-speed SRAM. Its memory products are not easily substitutable low-end generics; instead, they are high-end niche chips with higher barriers and technical thresholds, yielding a gross margin of ~40% and exhibiting weaker cyclicality.

3. Performance growth from 2023 to 2025 has been steady. In Q1 2026, benefiting from the AI-driven surge in memory demand, revenue grew 54.5% YoY, and net profit surged 331.6% YoY.

According to the semi-annual earnings preview, the company maintains high growth. Calculated at the median of expectations, net profit is approx. RMB 1.18bn (+480% YoY), and revenue is approx. RMB 3.99bn (+77% YoY), showing strong momentum.

4. The upper limit of the issue price is HKD 102.8. The A-share closing price today was RMB 152.75 (up 8.2% yesterday, down 1.7% today), implying a discount rate of 42.2%.

Among current AH-share memory plays, Montage Technology trades at a 14.5% premium, and GigaDevice at 2.35%. Montage specializes in interface/interconnect chips; while part of the supply chain, its discount rate reference is weak.

GigaDevice has a high comparability with the company. However, objectively, GigaDevice surpasses Ingenic in memory purity, earnings scale and growth, capital recognition, and listing liquidity. Furthermore, although GigaDevice's NOR Flash has stronger cyclical attributes, this actually made its earnings elasticity and benefit more pronounced during the current price surge driven by supply-demand gaps.

A few words on liquidity: When GigaDevice listed in January, the discount rate was ~40%. It only narrowed significantly after officially entering Stock Connect in February, even turning into a premium. It is unlikely that Ingenic will directly benchmark against GigaDevice in its early listing phase.

Overall, I believe a reasonable initial discount rate for Ingenic would be 20%-30%, corresponding to a 20%-40% upside for the H-share. Coupled with the recent bottoming and rebound in the memory sector, as long as the A-share market doesn't hit consecutive limit-downs, the safety cushion for this stock remains substantial.

IPO Rating: ★★★★~★★★★★ (Final strategy and rating to be posted)