Ingenic Semiconductor Co.,Ltd. (HKG: 03223) has officially launched its global H-share offering, targeting a main board listing in Hong Kong on August 25. The maximum offer price is set at HK$102.8 per share, with total gross proceeds of up to approximately HK$3.22 billion before the greenshoe option is exercised. As a leading domestic player in niche memory chips, the company is riding the crest of the memory upcycle, with first-half results showing a dramatic surge. Behind the impressive earnings, however, lies a wave of concentrated selloffs by industry funds, related parties of the actual controller, and senior executives during the IPO window, with the A-H discount pricing, valuation contradictions, and cornerstone investor composition further amplifying market divergence.

Memory Supercycle Drives a 4x Net Profit Surge in H1 2026, but Inventory and Price Cycle Risks Loom for H2

The company originally built its foundation on low-power computing chips, and after acquiring ISSI in 2020, it transformed into a provider of "memory + computing + analog" chip solutions. Its products are widely used in automotive electronics, industrial and medical applications, as well as AIoT and smart security devices. Benefiting from the industry's upward cycle, the company has achieved leapfrog growth in performance. The H1 2026 earnings preview shows expected revenue of 3.99 billion yuan, a year-on-year increase of approximately 77%, with net profit attributable to shareholders ranging from 1.079 billion to 1.282 billion yuan, up 431.03% to 531.34% year-on-year.

Compared to consensus market expectations, institutions had previously forecast an average full-year 2026 net profit of approximately 1.15 billion yuan for Ingenic. The first-half earnings guidance alone already essentially covers, or even potentially exceeds, the full-year estimate. On a quarterly breakdown, Q1 net profit was 319 million yuan, while Q2's standalone figure reached 760-963 million yuan—already surpassing the full-year 2025 total of 376 million yuan. This means every yuan of profit in the second half becomes an additional "upside surprise."

The strong results are driven by the memory supercycle, with robust demand for the company's memory chips. DRAM products have seen significant price increases due to tight supply, while Flash products have benefited from growth in AI servers and optical modules, with notable volume increases. Overall, memory chip sales revenue has grown substantially. Meanwhile, due to raw material KGD shortages and price hikes, computing chip products have also undergone price increases, leading to strong year-on-year revenue growth. However, two key factors warrant attention. First, the high first-half profitability includes gains from releasing lower-cost inventory accumulated earlier, and as inventory is gradually consumed, these gains will taper off. Second, memory prices inherently exhibit strong cyclical volatility—while Q3 price increases have observable industry support, the Q4 price trajectory remains uncertain. Therefore, it would be inappropriate to linearly extrapolate Q2's high profit levels into future years.

Cyclicality Causes Sharp P/E Fluctuations; No Truly Comparable Peers Exist in the Sector

This also creates a practical valuation contradiction. Driven by the explosive first-half profits, the company's price-to-earnings ratio has fluctuated markedly. From 2023 to 2025, the static P/E remained at elevated levels above 100x. With the substantial release of profits, the trailing twelve-month P/E has now fallen to 51.1x. Notably, the first-half earnings surge has already approached some institutions' full-year expectations, making the 2026 forward P/E temporarily meaningless as a reference. The memory industry itself is highly cyclical, with profits swinging sharply with product prices, limiting the usefulness of static P/E metrics.

Within the semiconductor sector, P/E ratios vary enormously across companies. Each firm has different business structures, downstream customers, and industry cycle positions. Ingenic and GigaDevice have shown the most explosive performance this cycle, while Montage Technology has also grown but with relatively weaker elasticity. These differences in cycle positioning further widen valuation gaps. Due to these compounding factors, Ingenic lacks perfectly matched comparable companies, making direct peer P/E-based pricing imprecise. Similarly, GigaDevice's H1 2026 results are also close to institutional full-year expectations, and both companies exhibit short-term profit distortions in static valuations.

Issue Discount of at Least 35.7% Falls Within the 2026 Reasonable Range; Multiple Factors Will Determine Future Premium or Discount

The upper limit of the H-share IPO offer price is HK$102.8, representing a 35.7% discount to the latest A-share closing price, which sits within the reasonable range for A-to-H IPO projects in 2026. Notably, current A+H semiconductor names show clear divergence in premium/discount levels. Montage Technology and GigaDevice trade at H-share premiums of 17.4% and 6.5% respectively over their A-shares, while names like SG Micro and Will Semiconductor remain at discounts. Three factors drive this divergence. First, if the H-share free float is relatively small, there is theoretically room for the H-shares to shift to a premium later. Second is global capital recognition—Montage and GigaDevice are global leaders in their niches, making them more attractive to overseas funds. Third is the cyclical nature of the underlying business; Hong Kong investors naturally apply a risk discount to strongly cyclical names.

It is important to clarify that the IPO-stage issue discount is merely a pricing outcome and does not directly equate to future trading performance. The future H-share premium or discount will depend on the persistence of the memory cycle and shifts in capital structure.

Shareholder Selloffs Accelerate Ahead of IPO Window; Combined Reductions in 2026 May Exceed 7.5 Billion Yuan

Since shares began unlocking in 2022, two major industry funds—Yitang Shengxin and Wuyuefeng Jidian—have been steadily reducing their stakes. However, the real acceleration occurred after the Q1 2026 report, precisely during the storage rally and the preparation phase for the Hong Kong listing. Both institutions showed significant acceleration in their selling activity. The shares held by Yitang Shengxin and Wuyuefeng Jidian originated from the restructuring consideration for the acquisition of ISSI. By the end of 2023, Yitang Shengxin held 12.57% and Wuyuefeng Jidian held 9.06%. As of August 7, 2026, Yitang Shengxin's stake had fallen to 1.78%, and Wuyuefeng Jidian had exited the top ten shareholders list entirely.

Yitang Shengxin had been selling continuously in earlier periods. From 2025 through the end of Q1 2026, the cumulative reduction is estimated to exceed 2 billion yuan. Then, within just over two months from May to August 2026, another large-scale concentrated selloff occurred, with an estimated reduction of 2.7 billion yuan. Wuyuefeng Jidian's earlier reductions through 2025 were relatively limited, but accelerated after the Q1 2026 report. From Q2 2026 to August 7, 2026, the estimated reduction could reach 4 billion yuan. (All reduction amounts above are estimates based on average secondary market transaction prices during the respective periods, not actual reduction figures.)

Public information does not allow for a single attribution of the reduction motives. As private equity investment funds, state-owned LPs face performance assessment requirements for capital returns and rolling investments. At the same time, with share prices at cyclical highs, there are realistic conditions for realizing gains. Public materials cannot distinguish which factor is dominant. It is important to differentiate between two easily confused entities. The entity reducing A-shares, Wuyuefeng Jidian, is an integrated circuit special industry fund managed by Wuyuefeng Capital. In contrast, Arrow Target, listed among the Hong Kong cornerstone investors, belongs to an independent personal investment vehicle of Wu Ping. Their funding sources and investment decisions are independent and cannot be interpreted as the same party simultaneously selling A-shares while subscribing to H-share cornerstone positions.

Beyond the industry funds, related parties of the actual controller and senior executives have also concentrated their reductions during the 2025-2026 share price uptrend. During the first reduction plan from September to November 2025, Sihai Junxin sold 800,000 shares, Li Jie sold 800,000 shares, and Xian Yonghui, Zhang Yanxiang, and Zhang Min executed smaller reductions simultaneously. The combined reduction amounted to approximately 140 million yuan. During the second reduction plan from April to July 2026, Sihai Junxin reduced 4 million shares through centralized bidding, Li Jie reduced a combined 2 million shares using both centralized bidding and block trades, and Liu Fei, Zhang Min, and Zhang Yanxiang also executed reductions. The combined reduction for this phase was approximately 1.11 billion yuan.

Unlike the industry funds, the actual controller and senior executives face no fund maturity pressures. Their choice to concentrate profit-taking during the earnings breakout window is notable. Such substantial and accelerating concentrated selloffs inevitably impact market confidence. Even if fund exits are routine for equity investments, the combined estimated reduction of nearly 7 billion yuan by Yitang Shengxin and Wuyuefeng Jidian, highly concentrated at the peak of the memory cycle and during the sensitive IPO preparation window, carries signaling significance far beyond ordinary small-scale exits. The simultaneous profit-taking by the actual controller and core executives at cyclical highs further transmits the internal shareholders' valuation stance to the secondary market.

The market will naturally harbor concerns: once the memory cycle peaks and major original shareholders complete their exits, secondary market investors will be left alone to bear the full risk of a cyclical downturn. This gaming mentality will also directly impact the subscription levels and aftermarket performance of this Hong Kong IPO.

Cornerstone Investors Domestically Focused; Overseas Long-Only Participation Limited

On the cornerstone investor front, the combined cornerstone subscription accounts for 46.74% of the global offering shares, locking in nearly half of the offering and effectively suppressing selling pressure in the early listing period. However, the cornerstone participants are primarily Chinese public funds, wealth management subsidiaries, and domestic industrial capital, including GF Fund, Harvest Global, ICBC Wealth Management, Gaoyi, and Huaqin Technology. No international long-only sovereign funds or major overseas dollar hedge funds appear among them. Compared to certain semiconductor and AI sector Hong Kong IPOs in 2026, this cornerstone composition also reflects overseas institutions' relatively cautious stance toward strongly cyclical niche memory names.

In summary, Ingenic, through its positioning in the automotive and industrial niche memory segment, coupled with the global customer base and product portfolio gained from the ISSI acquisition, has genuinely captured the dividend from the current memory price upcycle. However, the risks are equally prominent. The company's profits are tightly bound to the memory cycle, and the inventory-driven earnings tailwind is not sustainable. The concentrated selloffs by industry funds and actual controller-related entities on the eve of the IPO disturb market risk appetite. The absence of overseas long-only funds among cornerstones is notable. The A-H issue discount is merely a static pricing outcome, and aftermarket performance remains highly dependent on the continuation of the industry cycle.