Inclusion in Stock Connect opens a new funding channel. Shenzhen Longsys Electronics (09976) focuses on the AI storage track to solidify its growth foundation.

Title context: Inclusion in Stock Connect opens a new funding channel. Shenzhen Longsys Electronics (09976) focuses on the AI storage track to solidify its growth foundation. Text: Starting October 8, Shenzhen Longsys Electronics (09976) H-shares were officially added to the Stock Connect eligible list, allowing qualified mainland investors to directly participate in trading its Hong Kong shares. This significantly broadens the investor base and is expected to further enhance trading liquidity. For Shenzhen Longsys Electronics, which has been listed in Hong Kong for just over a month, inclusion in Stock Connect means dual increments in trading activity and shareholder structure. However, the opening of the channel only represents improved capital "accessibility," not a signal for valuation re-ratingsouthbound capital places greater emphasis on earnings quality and realization pathways. Does Shenzhen Longsys Electronics meet the criteria? In the first half of 2026, Shenzhen Longsys Electronics delivered impressive results with operating revenue of 24.088 billion yuan and net profit attributable to shareholders of 10.577 billion yuan. But no matter how impressive the surface data appears, it must withstand scrutiny. How solid are the fundamentals of this world's second-largest independent semiconductor memory manufacturer? Fundamental Quality: Earnings Explosion and Three High-Growth Tracks Let's look at the financials first. In the first half of 2026, Shenzhen Longsys Electronics achieved operating revenue of 24.088 billion yuan, a year-on-year increase of 136.26%; net profit attributable to shareholders was 10.577 billion yuan, a year-on-year increase of over 715 times. Earnings quality also withstands scrutiny: comprehensive gross margin was 58.90%, up 45.95 percentage points year-on-year, marking five consecutive quarters of increase; ROE reached 56.92%, maintaining high capital efficiency; trade receivables and notes turnover days decreased from 40.7 days in 2023 to 23.2 days in the first four months of 2026, compressing the collection cycle by over 40%. While revenue doubled, collection actually accelerated. Behind the high growth is a fundamental shift in industry logicstorage has transitioned from consumer electronics to a core component of AI infrastructure. According to CFM Flash Market definitions, the global DRAM and NAND market size reached $137.14 billion in Q1 2026, up 81.6% quarter-on-quarter, with the industry officially entering an "AI-driven structural prosperity upcycle"; Morgan Stanley also predicts that by 2030, Agentic AI will contribute 26%77% of global DRAM incremental demand. The company's growth momentum has essentially detached from traditional consumer electronics constraints, with earnings explosion supported at the industry level rather than mere price speculation. Enterprise-grade storage is currently the most solid realization pathway. In the first half, Shenzhen Longsys Electronics' enterprise-grade storage revenue was 2.140 billion yuan, up 208.80% year-on-year, significantly outpacing overall revenue growth; high-end products such as eSSD and RDIMM accelerated volume ramp-up, having been introduced into the core supply chains of leading internet companies and mainstream server manufacturers, and passed certification for mass production and shipment with leading customers including LENOVO GROUP, JD Cloud, and Bilibili, completed compatibility adaptation with domestic CPU platforms including Kunpeng, Hygon, and Phytium, and deeply integrated into domestic computing infrastructure supply chains. On the industry side, server-related DRAM demand has accounted for 53% of global total demand, historically surpassing consumer electronics demand from phones and PCs for the first time; a single AI server carries 8 to 10 times the DRAM capacity of traditional servers, with NAND usage exceeding traditional servers by more than 3 times. Bandwidth, latency, and stability requirements have comprehensively upgraded, directly driving both volume and price increases for high-end enterprise-grade storage products; in Q2 2026, enterprise-grade SSDs accounted for 48% of global NAND shipments, nearly double that of a year ago. It is worth noting that LENOVO GROUP is both a core customer and a strategic investor subscribing to H-shares with $10 million. This deep binding of industrial capital provides additional endorsement for the earnings realization pathway. In terms of high-end positioning, Shenzhen Longsys Electronics has formed two new curves: edge AI and automotive-grade storage. In edge AI, the self-developed SPU storage processing unit combined with iSA intelligent storage architecture, and deep joint optimization with AMD: edge AI model carrying capacity increased 3.2 times, memory utilization efficiency improved 200%, and terminal DRAM usage reduced by 40%under 4GB low-configuration DDR, device response speed can approach traditional 6GB/8GB DDR levels, helping terminal manufacturers achieve higher AI performance at lower hardware costs. Currently, the company's cumulative production of various storage controller chips has exceeded 280 million units, among which the UFS4.1 controller, the first to adopt 5nm advanced process, has achieved stable mass production. According to Morgan Stanley estimates, the edge AI storage market size will grow from $10 million in 2025 to $6 billion in 2030, with a five-year compound growth rate of 257%, and the track space is sufficient to support long-term growth. In automotive-grade storage, the self-developed 5nm process automotive-grade UFS4.1 product achieves sequential read speeds of 4200MB/s and has entered the verification and introduction phase with high-level intelligent driving models and global leading automakers. The company's cooperation covers more than 20 OEMs and more than 50 Tier1 suppliers. The track space itself is vast enough: global average automotive storage capacity per vehicle has risen from 34GB in 2021 to 483GB in 2026, and L3 and above high-level intelligent driving models require 4TB20TB of storage per vehicle, hundreds of times the capacity of traditional phones. Overseas expansion is another safeguard for Shenzhen Longsys Electronics' high-quality development. The company has built three differentiated brand matrices: FORESEE, Lexar, and Zilia: FORESEE deeply cultivates B2B storage, Lexar positions itself in the global high-end B2C market with first-half revenue of 3.966 billion yuan, up 84.90% year-on-year; Zilia deeply cultivates the Latin American regional market with revenue of 3.950 billion yuan, up 184.58% year-on-year. In the first half, overseas revenue was 17.017 billion yuan, up 142.27% year-on-year, accounting for 70.64% of total revenue. The three-layer diversification of brands, regions, and customers significantly reduces dependence on a single market. Meanwhile, the September H-share IPO proceeds will mainly be invested in chip design, high-end AI storage product R&D, and global capacity and channel layout, reserving ample ammunition for the globalization strategy. Two-Way Convergence of Incremental Capital and Earnings Realization Inclusion in Stock Connect essentially introduces incremental mainland capital for H-shares: trading activity is expected to increase, shareholder structure tends toward diversification, and the company's investor base further expands. But for southbound capital, the opening of the channel is only the starting pointcapital accessibility does not equal automatic buying. Whether it can settle depends on whether the fundamentals can withstand scrutiny. From a fundamental perspective, Shenzhen Longsys Electronics' growth does not rely on a single product line: the volume and price increases of enterprise-grade storage, the sequential ramp-up of edge AI and automotive-grade storage, and the revenue contribution of the global brand matrix constitute a multi-point realization pathway; continuously rising earnings quality and genuine capital backing from industrial capital make growth built on verifiable operating facts. Southbound capital's style of "emphasizing fundamentals and looking at realization" is precisely the touchstone for this logicif earnings quality holds up, incremental capital will be willing to settle. When incremental capital continues to flow in and earnings are realized quarter by quarter, the two are expected to form positive resonance. On the industry side, AI's massive demand for storage continues, high-end storage prosperity has long-term support, and track demand space continues to expand; on the capital side, long-term capital is increasingly inclined to examine hard-tech assets through industrial logic. What can be expected is that Stock Connect brings not only improved liquidity, but also a re-pricing of Shenzhen Longsys Electronics' industrial value by a group of long-term perspective funds.