Title: New Stock Preview | Can Shenzhen Longsys Electronics cross the industry volatility in the new cycle driven by AI storage?

After experiencing a downturn caused by the slowdown in traditional consumer electronics demand, the semiconductor storage industry began a strong recovery from 2024 and fully entered a structural prosperity stage driven by edge-side AI, enterprise-level big data, and industrial control applications in 2025 and 2026. At this golden crossroads of technological disruption, accelerated localization, and supply chain restructuring, domestic storage companies are speeding towards the international stage of the capital market. As the world's second-largest and China's largest independent semiconductor storage manufacturer listed on the A-share market, Shenzhen Longsys Electronics (301308.SZ) has officially submitted a prospectus to Hong Kong Stock Exchange, beginning a new journey to establish an "A+H" dual financing platform layout. Storage cycle recovery combined with AI dividends have accelerated growth Shenzhen Longsys Electronics, established in 1999, is one of the earliest enterprises to enter the storage module industry in China. After listing on the ChiNext board of the Shenzhen Stock Exchange in 2022, the company gradually transformed from a single module manufacturer to a full-chain storage technology company. According to Zhishi Consulting data, based on storage product revenue in 2025, Shenzhen Longsys Electronics has risen to become the world's second-largest independent semiconductor storage manufacturer and the number one in the domestic market. In terms of business structure, the company has developed four core product lines including embedded storage, solid-state drives, mobile storage, and memory modules, covering the full range of scenarios from consumer electronics to enterprise-level data centers. In terms of revenue structure, embedded storage is the company's largest source of income, contributing 10.12 billion yuan in revenue in 2025, accounting for 44.0% of total revenue; solid-state drives and mobile storage achieved revenues of 5.70 billion yuan and 4.89 billion yuan respectively, accounting for 24.5% and 21.5% respectively; the memory module business is the fastest growing sector, with revenue reaching 2.16 billion yuan in 2025, more than triple in three years, accounting for 9.7%. Furthermore, the company's multi-brand strategy sets Shenzhen Longsys Electronics apart from its domestic counterparts. The company owns three clear brand matrices: its own brand FORESEE targeting the B-end commercial market contributed 9.06 billion yuan in revenue in 2025, accounting for 39.8% of total revenue, covering a wide range of industries including consumer electronics, IoT, automotive electronics, and enterprise-level customers. Acquired international high-end consumer brand Lexar generated 4.41 billion yuan in revenue in 2025, deeply cultivating the C-end market through a global channel system in mobile storage and consumer-grade SSDs; Zilia, a brand focusing on the Latin American B2B market, achieved explosive growth, with revenue soaring from 37.21 million yuan in 2023 to 2.899 billion yuan in 2025, accounting for over 12%, becoming the company's third largest revenue pillar. The three major brands working together have established a three-dimensional market layout of "industry + consumer, domestic + overseas." As of 2025, 66.8% of the company's revenue comes from outside mainland China, effectively diversifying the risk of fluctuations in a single market. In addition, unlike most domestic module manufacturers, the core strength of Shenzhen Longsys Electronics lies in its ongoing vertical integration strategy. The company has not stopped at the packaging and testing of storage modules but has extended to the upstream core components. Through subsidiaries such as Huiyi Microelectronics and Shanghai Yuanming Core, the company is developing its own storage control chips, including self-developed chips such as eMMC/SD controllers, SPI NAND, NOR Flash controllers, and UFS controllers. In addition to control chips, the company also possesses core capabilities in storage firmware algorithms, chip testing technology, system-level packaging design, forming a full industrial chain layout of "control design + firmware development + module manufacturing + brand operation." Nowadays, the AI wave has opened up a second growth curve for the company. In the enterprise and AI storage race, the company has launched high-performance SSDs, CXL2.0 memory modules, MRDIMM, and SOCAMM memory products designed specifically for AI data centers. Among them, SOCAMM can adapt to high-end computing platforms in terms of bandwidth and power consumption. At the same time, the company's automotive-grade products have entered multiple OEMs and Tier1 supply chains. Currently, the global storage industry is in a phase of both upward cycle and explosive demand for AI. From 2023 to 2025, the company's revenue has grown from 10.125 billion yuan to 22.766 billion yuan, doubling in two years, and net profit attributable to the parent company has changed from a loss of 0.828 billion yuan in 2023 to a profit of 1.423 billion yuan in 2025. The improvement in industry prosperity and optimization of product structure have collectively driven the growth in performance. Hidden concerns in expansion: high debt, strong cyclical and technological challenges Although the logic of growth at the business level is clear, the financial data disclosed in the prospectus show that Shenzhen Longsys Electronics has accumulated significant financial pressure during its expansion. From the end of 2023 to the end of 2025, the company's total assets increased from 13.68 billion yuan to 22.75 billion yuan, with a growth rate of over 66% in two years, indicating a significant expansion of the business. However, the growth in asset size heavily relies on debt-driven funding. Meanwhile, the company's total liabilities increased from 7.23 billion yuan to 14.39 billion yuan, nearly doubling, and the debt-to-asset ratio increased from 52.85% to 63.25%, indicating an increasing debt burden. Interest-bearing bank loans are a core part of the liabilities, with the book value increasing from 5.263 billion yuan at the end of 2023 to 10.490 billion yuan at the end of 2025, nearly doubling in two years, and becoming a major factor in raising leverage. In terms of debt maturity structure, the short-term repayment pressure deserves particular attention. By the end of 2025, interest-bearing bank loans due within one year amounted to approximately 6.112 billion yuan, accounting for nearly sixty percent of all interest-bearing borrowings, in addition to trade payables of 2.017 billion yuan and other payables of 0.473 billion yuan, indicating significant short-term payment pressure. Although the company holds cash and cash equivalents of 1.469 billion yuan, the coverage capacity of cash reserves is significantly insufficient compared to the significant short-term debt, and any fluctuations in operating cash flow due to changes in industry sentiment could impact the company's liquidity safety. It is worth noting that the company has initiated a targeted issuance plan on the A-share market, planning to raise no more than 3.7 billion yuan, and has already obtained approval from the Shenzhen Stock Exchange in May 2026. If the targeted issuance is successful, it will to some extent supplement the capital, optimize capital structure, and alleviate debt pressure, but the effectiveness of the investment output still needs to be verified over time. From a more macro perspective, the strong cyclical nature of the storage industry is an underlying risk that the company cannot avoid. Over the past three years, the significant fluctuations in the company's performance have been a direct reflection of the industry cycle: a net loss of 0.837 billion yuan in 2023 during the industry downturn; a turnaround to a profit of 5.05 billion yuan in 2024 as the industry bottomed out and recovered; and a sharp increase in net profit to 14.98 billion yuan in 2025 as the industry rapidly ascended, with profit fluctuation exceeding that of revenue. Storage chip prices exhibit obvious cyclical fluctuations influenced by global supply and demand relations, where prices rise along with demand in an upward cycle and fall in a downward cycle. Midstream module manufacturers' performance often shows significant fluctuations along with industry cycles. Although the industry is currently in an upward trend, with the gradual implementation of global storage manufacturers' capacity expansion plans, the supply-demand relationship may reverse once again. If downstream AI and consumer electronics demand does not meet expectations, the industry may enter a downward cycle earlier, putting pressure on the company's revenue and profits. Furthermore, competition in the storage industry is intensifying. In the consumer market, there are many participants, leading to frequent price wars and continuous compression of profit margins. The company's Lexar brand faces dual competition from international giants and numerous domestic manufacturers; the industrial and automotive-grade market entrants continue to increase, with signs of homogenized competition becoming apparent; the enterprise and AI storage markets have long been dominated by international giants such as Samsung, Micron, and SK Hynix, with high barriers in technology, ecosystem, and brand, making it difficult for domestic companies to break through. The uncertainty of technological iteration is also a key factor testing the company's long-term competitiveness. The storage industry's pace of technological iteration is fast, with interface standards and media upgrades continuously progressing, requiring manufacturers to maintain high levels of R&D investment. Although the company has made breakthroughs in the mid-to-low-end control chip field, there is still a gap in high-end enterprise-level control, high-end DRAM products, etc., compared to international leading levels. Any deviation in the pace of technological iteration could lead to a decline in product competitiveness, missing out on the dividends of industry upgrades. Overall, as a leading company in the domestic storage module industry, Shenzhen Longsys Electronics has clear growth resilience in the current storage cycle upswing and the explosion of the AI industry, thanks to its industry accumulation, global brand matrix, and continuous vertical integration strategy. This Hong Kong IPO will provide the company with more robust capital support and a broader global platform. However, rising debt leverage, strong cyclical fluctuations in the storage industry, increasingly fierce market competition, and rapidly evolving technological roadmaps all present real challenges to the company's development. Therefore, the long-term value of the company lies not only in the performance elasticity under industry dividends but also in whether it can break through the high-end market through continuous technological investment, gradually freeing itself from cyclical constraints, and achieve a true transformation from a module manufacturer to a storage technology company.