Market cap jumps to HK$14.5 billion; has ChipSmart Semiconductor (07672), which surged over two days, already completed "Stock Connect inclusion"?

On November 10, ChipSmart Semiconductor (07672) officially listed on the Main Board of the Hong Kong Stock Exchange with a final offer price of HK$8.88. It opened at HK$10.70, up 20.5% from the offer price, and touched an intraday high of HK$12.48, briefly rising more than 40%. Buying momentum continued in the afternoon, and the stock closed at HK$11.4, up 28.4% from the offer price, with full-day turnover of 22.75 million shares and total proceeds of HK$245 million. On the second trading day (November 11), the stock opened at HK$11.3, dipped to HK$11.05 in the morning session before finding support and rallying quickly. Buying momentum persisted in the afternoon, and the stock surged on heavy volume toward the close, touching an intraday high of HK$13.92, a post-listing high, before closing strongly at HK$13.66, up 19.82% from the previous close. It is worth noting that less than two months remain before the end of the review period for the latest round of Stock Connect adjustments (through end-December). After surging over two days of trading, ChipSmart Semiconductor's market cap has jumped to HK$14.56 billion. Can it ride the hot market sentiment to successfully enter Stock Connect at the Hang Seng Index annual review at end-December? **Holding above the offer price for two days** In our view, ChipSmart Semiconductor's high open on its first day was not surprising. The over-13% gain in the grey market had already set the tone for the public market. Although the 9.84x Hong Kong public offering subscription rate was hardly frenzied, with a one-lot winning rate as high as 80%, retail investors' willingness to take profits and the absorbing power roughly reached a balance at the opening stage. Stock Connect inclusion logic certainly depends on sustained satisfaction of the average market cap requirement, but more notably, Stock Connect rules impose no absolute listing-duration limit on new stocks. As long as the market cap and liquidity thresholds are met during the review period, a "listed this quarter, included next quarter" fast track can be achieved. This means ChipSmart's market cap of HK$14.56 billion already qualifies it to bid for a Stock Connect ticket in a very short time. This "fast-track inclusion" expectation has already been clearly corroborated by first-day broker seat data. According to Futu APP data, on the net sell side, the largest seller was China Galaxy International with net sales of 2.199 million shares, while Grand Fire and Huatai International also net sold 605,000 shares and 449,500 shares respectively, indicating extremely strong willingness among IPO profit-takers to cash out. In our view, despite such heavy selling pressure, the share price still held firm and closed up 28.4%. The absorbing power behind this came from funds that highly recognize the "inclusion" logic. On the net buy side, Futu Securities, which represents savvy capital flows, net bought 461,000 shares, followed by BOCI and OCBC. More notably, foreign institution Barclays Asia also appeared among the buyers. This seat pattern of "IPO subscribers resolutely cashing out while allocation funds actively absorbing" shows that the market is not blindly speculating; rather, funds eyeing the potential of southbound capital bidding up the stock are actively accumulating positions. This structure, which held steady under massive selling pressure and completed an optimization of the shareholding base, gives ChipSmart Semiconductor more solid footing on its path toward knocking on the door of Stock Connect. **Concentration and sedimentation of the international placement** At first glance, the international placement data does not look impressive. The subscription rate was about 1.13x with 83 placees, hardly enthusiastic by recent Hong Kong IPO market standards. But the surface-level moderation masks a key structural fact: cornerstone investors have locked up more than 35 million shares, accounting for more than 30% of the international offering, with a lock-up period through August 2027. This means the truly free-floating international placement shares amount to only about 60 million shares, distributed among 83 placees. The starting allocation per placee is in the millions of Hong Kong dollars, and core placees' allocation scale reaches tens of millions of Hong Kong dollars, which falls precisely within the allocation range of small and mid-sized institutions and industrial capital rather than dispersed retail-style holdings. This in itself constitutes an implicit sedimentation of the shareholding base. Although the specific identities of the 83 placees have not been announced, the nature of their capital can still be traced by combining the pre-IPO shareholder map and the cornerstone lineup. GF Fund entered with US$15 million, representing public fund long-only capital's recognition of the pricing; Guohui Hong Kong's US$10 million is backed by Shandong provincial state-owned capital; Maxwell's RMB100 million traces through to Suzhou Maxwell Technologies, a semiconductor equipment manufacturer. An equipment maker taking a cornerstone stake in an OSAT is, in the current context where advanced packaging increasingly relies on joint definition by the equipment side and the process side, more industrially meaningful than financially meaningful, and these shares will not easily loosen because of first-day gains. We note that, judging from the pre-IPO shareholder list, the presence of Xiaomi Yangtze River Industry Fund, OPPO Chen Mingyong's Xunxing Investment, and MediaTek's Gaintech in ChipSmart's early financing is no coincidence. End-device makers and chip design companies taking industrial shareholder stakes in an OSAT provider typically corresponds to strengthened supply chain relationships and priority arrangements for advanced packaging capacity. Although these shareholders do not appear on the cornerstone list, it cannot be ruled out that their affiliates or partners participated in the subscription through the international placement channel. If so, the actual proportion of industrial capital among international placement placees would be higher than the surface data suggests, and the actual selling pressure after the first-day high open would be smaller than the volume corresponding to the public float, which is conducive to price stability before southbound capital enters. In fact, against the backdrop of an overall chilly recent Hong Kong IPO market, the 1.13x international placement subscription rate is not surprising. Since late October, several new stocks have delayed their offerings close to listing, and since September, public offering subscription rates have fallen markedly from the highs seen in the first half of the year, giving a clear sense of market temperature. ChipSmart Semiconductor's subscription data is at a normal level within this frame of reference, and the company's announcement warning of a highly concentrated shareholding structure also deserves attention. But the significance of the shareholding structure lies in the fact that it determines whether the stock can maintain a respectable price center through the implicit lock-up of industrial capital during the window before southbound capital support arrives. From the first-day close stabilizing above HK$11 to the second-day late-session surge on heavy volume and final close at HK$13.66, this stability has been tested over two consecutive trading days. The support that implicit industrial-capital lock-up provides to the price center is being genuinely validated on the tape during the window before inclusion expectations are realized. **Scarce advanced packaging label, clear loss-narrowing slope** Turning from the shareholding game back to fundamentals, ChipSmart Semiconductor's story has a solid side. In 2025, the company's advanced packaging revenue was RMB737 million, accounting for about 73% of total revenue. This ratio has clear scarcity value within the Hong Kong semiconductor sectorHong Kong-listed OSAT targets are already few and far between, and one with advanced packaging revenue at 70% is even more of a blank. This means ChipSmart inherently qualifies for separate pricing by capital: it is not a company with "a traditional OSAT business plus a bit of advanced packaging concept," but an OSAT enterprise with advanced packaging as the main revenue body. The prospectus groups QFN, BGA, LGA, WLP and 2.5D/3D under the advanced packaging category. In 2025, the RMB737 million revenue contribution mainly came from product lines such as QFN and BGA that have already achieved mass production, indicating that the company's advanced packaging capability is not a concept roadmap but has already converted into a real revenue base. Meanwhile, 2025 2.5D/3D advanced packaging revenue was RMB244,000, accounting for less than 0.03% of total revenue. This figure does look tiny on its own, but its significance lies not in the current-period contribution but in the fact that it marks the completion of the 0-to-1 introduction of the company's most cutting-edge packaging capability. In the current era where advanced packaging increasingly relies on joint definition by the equipment side and the process side, 2.5D/3D is precisely the core direction of demand spillover from computing chip packaging, and the strategic landing point for industrial capital willing to take cornerstone stakes in OSAT providers. The lower the base, the greater the revenue elasticity from subsequent capacity ramp-up and customer introductionthis is not a question of "the story being thin because cutting-edge revenue has just started," but one of "the cutting-edge packaging option not yet being priced, with ample upside." The path is already clear: after the Nanjing AI packaging and testing base's capacity comes online, connecting to the spillover demand for computing chip packaging will be the key catalyst for realizing this option. In addition, the gross loss ratio narrowed from 38.4% in 2023 to 18.0% in 2025, and further to 17.9% in the first four months of 2026, narrowing by more than 20 percentage points over two years; capacity utilization simultaneously rose to above 80%. The slope of this loss-narrowing curve is rare among Hong Kong-listed OSAT targets, and the signal it conveys is clear: the company is in a stage of capacity ramp-up with an earnings inflection point approaching, and the direction and speed of marginal improvement have already been validated in the financial statements. Whether the gross loss ratio can cross the zero line is the most noteworthy indicator to track in the coming quarters; and the slope already achieved by the loss-narrowing curve is precisely the underlying basis for the market's willingness to price in an earnings inflection point in advance. In summary, ChipSmart Semiconductor already qualifies to bid for a Stock Connect ticket in a very short time. Its market cap reached HK$14.56 billion after two days of listing, above the current dynamic threshold range of approximately HK$9.1 billion to HK$10.2 billion, leaving ample buffer for meeting the 12-month average month-end market cap requirement going forward. The international placement structure, the loss-narrowing curve and the 70% advanced packaging share provide triple support in terms of shareholding stability, earnings improvement visibility and target scarcity, and the case for inclusion is moving from expectation toward verifiability. With the first shot fired in the inclusion game, holding above the offer price for two consecutive days is only the starting point; subsequent quarterly data will be the validation window for this narrative to move from "having conviction" to "having delivery."