The largest Hong Kong stock market IPO of the year, reshaping Zhongji Innolight's valuation?

Introduction: Zhongji Innolight is about to list on the Hong Kong Stock Exchange, with an AH discount, a lineup of cornerstone investors, and valuation 博弈。

Zhongji Innolight's discounted issuance on the Hong Kong stock market has already demonstrated strong capital-raising capabilities, attracting multiple funds such as Temasek, Alibaba, and Tencent to gather around this "optical module leader," and it is very likely to set the record for the largest Hong Kong IPO this year.

On July 22, $ZJ INNOLIGHT(03308.HK) officially launched its public offering on the Hong Kong Stock Exchange, with a maximum issue price of 10.10 HKD/share, raising approximately 55 billion HKD in the base offering. If the over-allotment option is fully exercised, the maximum fundraising could reach 63.3 billion HKD! The prospectus clearly states that the subscription period is from July 22 to July 27, with pricing expected on July 28 and listing on July 30.

Data from East Money Choice shows that so far this year, there have been a cumulative 100 IPOs listed on the Hong Kong Stock Exchange, with cumulative initial fundraising amounts (including over-allotment) reaching 273.355 billion HKD. Among them, Luxshare Precision, Shenghong Technology, Muyuan Foods, and Dongpeng Beverage had initial fundraising amounts (including over-allotment) of 24.266 billion, 23.135 billion, 12.099 billion, and 11.099 billion HKD, respectively.

In comparison, Zhongji Innolight has the largest fundraising scale and may surpass CATL's previous fundraising scale, becoming the largest tech IPO on the Hong Kong Stock Exchange since Alibaba's secondary listing in 2019.

According to data from F&S Consulting, Zhongji Innolight has ranked first globally in revenue scale in the optical interconnection solutions market for five consecutive years since 2021. Data from LightCounting shows that in 2025, Zhongji Innolight's global market share was approximately 21.2%, far exceeding the second place at 14%.

In the high-end product sector, Zhongji Innolight's global market share for 800G optical modules is about 40%, and its market share for 1.6T optical modules reaches 50%-70%. It is a core supplier for NVIDIA's Blackwell architecture servers (Blackwell is NVIDIA's GPU architecture designed for next-generation AI and accelerated computing workloads).

Currently, Zhongji Innolight's A-share market capitalization has long broken through the trillion mark, but this H-share issuance has shifted market focus beyond just "another tech company listing in Hong Kong." Behind this IPO, 33 cornerstone investors have poured in 27 billion HKD, and the signals revealed by their lineup are worth paying attention to.

01 AH Discount of 23%: The Game of Valuation Anchors

What is most noteworthy for investors in this IPO is the significant price difference between the H-share issue price and the current A-share price, and the resulting game of valuation anchors.

As of the close of A-shares on July 21, Zhongji Innolight's stock price was 1136.55 RMB/share, with a total market capitalization of approximately 1.27 trillion RMB. Converted at the exchange rate on that day, the A-share price was equivalent to about 1317 HKD/share.

The maximum issue price for H-shares is 1010 HKD/share, representing a discount of approximately 23.3% compared to the current A-share price. If the final pricing is lower than the upper limit, the discount will be even larger.

It should be noted that price differences between A+H shares are common phenomena. The investor structure, liquidity, and valuation systems of the two markets are different, and the price difference will not automatically converge. However, for an industry leader like Zhongji Innolight, the magnitude of the discount is still worth attention.

A more valuable comparison comes from the valuation levels of global peers.

BOCI Securities gave Zhongji Innolight a target price of 1600 RMB, corresponding to a 32x P/E ratio for 2027, and believes that "compared to overseas optical module/optical communication companies, Zhongji Innolight also has a relatively obvious valuation discount."

The institution also stated that Zhongji Innolight's valuation is lower than comparable Chinese mainland and global major optical module companies, "the 32x target P/E ratio is 0.7 standard deviations higher than the average P/E ratio of the past five years, which can better reflect the high prosperity of AI and the upward trend of the optical module industry.

However, as of July 21, Zhongji Innolight's A-share PE (P/E ratio) was about 109 times, still at a historical high. High valuation means high expectations; if earnings growth fails to meet expectations or industry prosperity changes marginally, the space for valuation correction will also be large. The discounted issuance of H-shares itself may also form certain anchoring pressure on the high valuation of A-shares.

Notably, in terms of gross margin, Zhongji Innolight's optical module business is about 42% (2025 data), which is no less than when compared with global leading optical chip companies Lumentum and Coherent. This contrast of "leading position + lower valuation" has attracted special attention from international capital.

On July 17, Goldman Sachs released its latest research report, directly raising Zhongji Innolight's 12-month target price for A-shares from 1187 RMB to 2581 RMB, an increase of over 117%, sparking widespread discussion in the investment circle.

The core reason for Goldman Sachs' upgrade is not short-term performance explosion, but rather the belief that the optical module industry is shifting from an 800G stock cycle to a new round of profitability driven by 1.6T/3.2T new technologies, requiring a re-pricing of the company's long-term profit center. Specifically, continuous upgrades in NVIDIA AI servers are driving the acceleration of optical modules from 800G to 1.6T and even 3.2T, and Zhongji Innolight，凭借 its first-mover advantage in silicon photonics and global leading position, will benefit significantly in this round of technological upgrades.

Will the discounted issuance of H-shares pull down the A-share valuation center, or will the re-evaluation by international capital push up the A-share pricing? This will be the main line of market 博弈 for a period after the listing.

02 What are the different attitudes of the 33 cornerstone investors?

This IPO introduced 33 cornerstone investors, who collectively subscribed to approximately $3.45 billion (about 27 billion HKD), with a 6-month lock-up period, accounting for nearly half of the base fundraising scale, making the lock-up ratio quite high.

From the perspective of fund attributes, sovereign wealth funds and pension funds represent the recognition of long-term capital: such as Singapore's sovereign wealth fund Temasek (Taibai + TrueLight), the UAE's sovereign wealth fund Abu Dhabi Investment Authority (ADIA), and Canada's Pension Plan Investment Board (CPP Investments).

The characteristics of these funds are long cycles, low risk appetite, and focus on long-term fundamentals. Their large-scale entry indicates that Zhongji Innolight's industry leadership and long-term growth logic have been recognized by the world's most stable capital, rather than being mere thematic speculation.

Meanwhile, funds from top international asset management institutions represent the attitude of international mainstream pricing power, including HHLRA under Hillhouse, JPMorgan Asset Management (JPMAM), BlackRock, and Wellington Management, all belonging to global top-tier asset managers.

BlackRock, JPMorgan Asset Management, and Wellington are the main pricing forces in the global capital market. Their participation in subscriptions means that after Zhongji Innolight's H-share listing, it is expected to quickly enter international mainstream indices and institutional allocation pools, with support for both liquidity and valuation centers.

Finally, industrial capital provides signals of industrial chain synergy.

Alibaba and Tencent each subscribed to $50 million. Although the amount is not the largest, the signal significance is special. As the two largest cloud providers in China, they themselves are downstream customers of optical modules. Industrial capital participating in subscriptions not only demonstrates recognition of upstream core suppliers but may also imply expectations for deeper industrial chain cooperation in the future.

Other well-known institutions Bain Capital, General Atlantic, Boyu Capital, IDG Capital, Yunfeng Capital, Chow Tai Fook Enterprises, and Oaktree Capital are also on the cornerstone list, covering various fund types such as PE, VC, hedge funds, and family offices.

Overall, the cornerstone lineup can be described as "all-star level," covering a comprehensive range of fund types, providing strong support for the stock price in the early stages of listing.

03 Where will the 55 billion in fundraising be invested?

According to the prospectus, the net proceeds will be allocated as follows (within the next five years):

• 35% (approx. 19 billion HKD): Continuous investment in R&D of optical interconnection products

• 30% (approx. 16.3 billion HKD): Expansion of global production capacity to support product upgrade routes

• 15% (approx. 8.2 billion HKD): Strategic acquisitions and investments

• 10% (approx. 5.5 billion HKD): Enhancing supply chain resilience and commercialization capabilities

• 10% (approx. 5.5 billion HKD): Working capital and general corporate purposes

Notably, while 30% of Zhongji Innolight's fundraising is used for capacity expansion, the expansion is not for the currently price-declining 800G, but for the higher-end 1.6T and next-generation 3.2T products. High-end products are currently in a state of 供不应求 (supply falling short of demand), and the company, thanks to its deep binding with NVIDIA, has high order visibility. This is a "structural expansion" rather than blind expansion across the entire product line.

Goldman Sachs' research report also mentioned that the company's capital expenditure in 2026 increased by 155% year-on-year, mainly used to undertake orders for high-speed optical modules.

In addition, Zhongji Innolight plans to use 15% of the fundraising for strategic acquisitions, which has sparked investor speculation about what the most likely direction for acquisition would be?

From the perspective of current industry technology iteration, the most watched categories are three: first, silicon photonics-related technologies. Silicon photonics is the core technology route for next-generation optical modules; acquiring related chip or design companies can strengthen technical barriers; second, CPO (Co-Packaged Optics). If the CPO technology route accelerates maturity, early layout can avoid being disrupted; third, upstream optical chips. Extending upstream enhances supply chain autonomy and controllability as well as gross margins.

Zhongji Innolight's Hong Kong IPO is an excellent window to observe the global AI computing power industry chain. The 55 billion HKD fundraising scale, the all-star cornerstone lineup, and the significant AH discount all ensure that this IPO will inevitably become one of the most important events in the Hong Kong stock market in 2026.

Listing on July 30 is just the beginning; the real test lies after the listing.