Interpretation of IPOs | From beta to α in the storage industry, steady profit and cycle crossing under the Hongxinyu (02681) asset-light model

As the slope of DRAM contract price growth slows and the forward ROI of AI capital expenditure is re-examined by the market, the “forward premium” in the valuation of storage companies is gradually being squeezed out. This is also the core reason for this round of storage sector adjustments.

From the perspective of investment analysis, industry sentiment is no substitute for judging the ability to do business as an individual. While observing price elasticity, it is inevitable that the storage sector will switch from “beta market” to “alpha screening,” and the market pricing logic will also shift from anticipating price increases to examining whether storage companies can develop steadily over the long term.

In this context, Hongxinyu (02681), which officially launched its stock offering on October 30, provided a sample worth dismantling: while profits are growing rapidly, the company continues to promote research and development of main control chips and storage products. This is a representative enterprise under the current “alpha screening” logic.

The Zhitong Finance App learned that Hongxinyu plans to sell 14.717,200 H shares globally in this IPO. Among them, Hong Kong public offerings account for about 10%, international offerings account for about 90%, and 15% over-allotment rights. The offering price range is HK$72.29-82.9 per share, with 100 H shares per lot. It is expected that H shares will start trading on the Stock Exchange at 9:00 a.m. on November 12 (Thursday).

Furthermore, Hongxinyu introduced 7 cornerstone investors in this IPO and subscribed for a total of about HK$452 million worth of H shares, including the industrial capital of Chuanyin International Co., Ltd. and Jiang Bolong Investment Co., Ltd. This is a direct endorsement by downstream customers and peers of the technical strength of Hongxinyu's main control chips and storage modules.

Cornerstone investors' support for real money essentially stems from recognition of Hongxinyu's business model and profit quality. Hongxinyu has strong steady profitability under an asset-light operating model, and the steady resilience of this profitability is clearly confirmed at both ends of the industry cycle.

2023 can be said to be the bottom of the global storage industry cycle, but during this year, Hongxinyu lost only 117 million yuan and a net interest rate of -1.33%, significantly outperforming its peers. At the time, many of its peers lost several times that of Hongxinyu.

If the remarkable resistance shown during the industry's downturn is one facet of Hongxinyu's steady development resilience, then the company's steep profit elasticity during the upward period provides another perspective for observing its operating performance.

Thanks to the booming development of the AI industry driving the storage industry into a boom cycle, Hongxinyu turned a loss into a profit in 2024, recorded a net profit of about 483 million yuan, further increased to 1,364 billion yuan in 2025, and achieved net profit of 3.841 billion yuan in the first four months of 2026, which is already 2.82 times the net profit for the full year of 2025.

This steady state profitability of “low retracement and high elasticity” stems from the company's asset-light strategy of outsourcing mainly wafer processing, packaging, and testing to third party vendors. This model reduces capital investment requirements for self-built wafer manufacturing and encapsulation production capacity, allows resources to be concentrated on core aspects such as product definition, main control R&D, and quality management, maintaining operational flexibility in the midst of cycle fluctuations, and ultimately achieving asymmetric returns from downside decline and upward release of operating leverage.

And this centralized allocation of resources enables the company to maintain countercyclical R&D intensity in the midst of cyclical fluctuations. From 2023 to 2025, Hongxinyu spent about 283 million yuan, 392 million yuan and 493 million yuan respectively, for a total of about 1,168 million yuan over three years.

With continuous high-intensity R&D investment, Hongxinyu has built four major technology platforms for main control chip design, firmware algorithms, test systems, and storage medium characteristics analysis to accelerate the transformation of technology reserves into product dividends. This transformation is mainly reflected on three levels:

First, the main control chip is autonomous. Hongxinyu has become one of the few independent storage vendors in China with the ability to independently design, develop and commercialize master control chips. The company has mass-produced a variety of self-developed controllers, and 8 other models are in the sample delivery, streaming and design stages, covering UFS, eMMC, USB and PCIe SSDs.

Second, software and hardware collaborate to build technical barriers. The collaboration between self-developed master control and firmware algorithms helps improve the read/write performance, power consumption control and cost structure of the product, and forms a solid technical moat for Hongxinyu.

Third, the reusability of technology platforms supports the expansion of scenarios. Based on four major technology platforms, Hongxinyu has achieved an accelerated extension from basic consumer electronics to vehicle specifications, enterprise-level and AI storage scenarios, and has built a cross-cycle product matrix.

In the field of consumer electronics, Hongxinyu covers leading brands such as Xiaomi, Telecom, OPPO, Vivo, TCL, and Xiaodu; as some customers expand into the automotive industry, Hongxinyu entered automotive-grade storage and entered the Tier 1 supply chain in 2023, broadening application scenarios other than consumer electronics.

At the same time, the company's enterprise-grade SSDs have been mass-produced, and demand for AI servers has driven DRAM revenue to rapidly increase from 1.3% in 2023 to 24.8% in 2025, forming the third growth curve after consumer electronics and vehicle regulations.

It can be seen from this that Hongxinyu's steady state profitability does not simply depend on rising storage prices, but also comes from the accumulation of product definition rights and technical barriers. This is a significant difference from module manufacturers that simply rely on processing and assembly. With profit resilience under the asset-light model and the continuous release of technical dividends driven by R&D, it may be a probable event that Hongxinyu will receive capital raised during the offering phase.