Surging from 14.76 million to 11 billion, how long can Longsys sustain its inventory dividend?

After the explosive performance forecast of Longsys (301308.SZ), known as the "top independent storage module manufacturer in China's A-share market", a new question has emerged: How long will the dividends brought by low-cost inventory last?

Just one year ago, Longsys' net profit for the first half of 2025 was only 14.76 million yuan, while its revenue in the same period reached as high as 10.2 billion yuan, with a net profit margin of merely 0.4%. One year later, the company's projected semi-annual net profit has skyrocketed to the range of 9.2 billion yuan to 11 billion yuan, representing a year-on-year increase of 622 to 744 times!

The key to Longsys' remarkable gains lies in the "scissor gap" profit formed by its previous low-cost wafer inventory versus the current high prices of storage products.

Investors who firmly bet on Longsys have also reaped substantial returns. As of the close of trading on July 9, Longsys' share price stood at 620 yuan per share, marking a cumulative increase of 155% since the start of the year. On July 1, the stock price had just hit an all-time high of 749.88 yuan per share; calculated based on the highest and lowest prices of the year, the maximum gain since the beginning of 2026 reached 208%.

However, following the release of the first-half performance forecast, Longsys' share price has undergone a correction. The stock declined for two consecutive trading days on July 7 and 8, closing at 592.71 yuan per share on July 8. In just six trading days from July 1 to July 8, the share price dropped by more than 20%, and the total market capitalization retreated from over 300 billion yuan to 250.8 billion yuan, a reduction of more than 50 billion yuan.

01. Inventory Continues to Rise

By strategically replenishing positions at low prices and selling at high levels, Longsys' bold contrarian move has indeed allowed the company to capture massive profits.

Longsys recorded a net profit of 3.862 billion yuan in the first quarter of this year, surging 2644.05% year-on-year. Based on the estimated net profit for the first half of the year, the company's net profit for the second quarter is approximately 5.3 billion to 7.1 billion yuan, representing a quarter-on-quarter increase of 37% to 87%, with continued growth virtually guaranteed.

Some institutions predict that Longsys' full-year net profit in 2026 will reach about 20 billion yuan, and the net profit will continue to grow in 2027 and 2028, although the growth rate will slow down.

Longsys, which has benefited from low-cost inventory gains, is still actively "increasing its positions".

Financial reports show that by the end of 2025, Longsys' inventory turnover days were 191.4 days, with inventory value standing at about 11.68 billion yuan. By the end of the first quarter of 2026, the inventory value had reached approximately 17.96 billion yuan, and the turnover days extended to 302.7 days.

Looking at the longer time horizon, Longsys' inventory value has increased year by year over the past three years: the inventory figures for 2023, 2024, and 2025 were 5.893 billion yuan, 7.833 billion yuan, and 11.68 billion yuan respectively, accounting for 43%, 46%, and 51.34% of the total assets.

By the end of the first quarter of 2026, Longsys' inventory reached 17.96 billion yuan, making up roughly 50% of its total assets.

This aligns with market research judgments. In the past "cyclical destiny" of the storage industry, the market was dominated by short bull cycles and strong bear cycles driven by consumer electronics such as mobile phones and PCs, with the upward cycle lasting about 6 to 12 months. After the transition to an ultra-long prosperity weak cycle driven by AI computing power, it is widely believed that the strong cycle will extend to around 3 years, and the downward depth will be much smaller than that of several major historical bear markets in terms of demand.

During the downward cycle of the storage industry from 2024 to 2025, the prices of DRAM and NAND Flash chips fell to their 15-year historical lows. However, in its financial reports, Longsys firmly believed that the subsequent demand for AI computing power would drive the rigid demand for storage to rise, so it signed long-term supply agreements with four leading global wafer manufacturers: Samsung, SK Hynix, Kioxia, and Micron.

From the current market perspective, Longsys' previous "bottom-fishing strategy" has proven correct. The large volume of low-cost wafers has allowed the company to capture "dividends" in the price surge of storage products.

According to data from CFM Flash Memory Market, from the beginning of 2025 to early December 2025, the price indices of DRAM and NAND Flash increased by 327.59% and 166.28% respectively.

Meanwhile, data from TrendForce shows that in the second quarter of 2026, traditional DRAM contract prices rose 58% to 63% quarter-on-quarter; NAND Flash chip prices increased 70% to 75% quarter-on-quarter. The firm also forecasts that in the third quarter of 2026, DRAM prices will continue to rise 13% to 18% quarter-on-quarter, and NAND prices will rise 10% to 15% quarter-on-quarter, indicating that the price hike cycle will continue but the growth rate will narrow.

In addition, Samsung Electronics has raised DRAM selling prices a total of three times since the beginning of this year.

Data shows that in the first quarter of 2026, the average DRAM price skyrocketed by about 90%, and the increase in the second quarter was between 50% and 60%. Recently, Samsung has launched third-quarter DRAM price negotiations with downstream customers, targeting a 20% increase in the average selling price of general-purpose DRAM compared to the previous quarter. Some industry insiders revealed that they had received verbal notifications of Samsung's DRAM price hike as early as June this year.

While DRAM prices are still on an upward trend, Longsys continues to "increase its positions".

However, it is worth noting that as inventory rises rapidly, Longsys' debt scale has also expanded in tandem with its stockpiling. By the end of the first quarter of 2026, the company's asset-liability ratio climbed to 65.55%, the highest level since 2018. Furthermore, Longsys' short-term borrowings amounted to 6.212 billion yuan, and non-current liabilities due within one year stood at 1.101 billion yuan, while the ending balance of cash and cash equivalents was only about 4.14 billion yuan.

02. Expanding Influence Through Messi Cooperation: What is Longsys' Future Growth Ceiling?

As a top-tier storage module manufacturer ranking first in China and second globally, Longsys' success is not solely due to the opportunities brought by the AI industry upgrading. Before the arrival of these opportunities, the company had already established a complete profit-generating system.

In simple terms, Longsys' business model is to "purchase raw storage chips, design chips independently, complete packaging and processing, and sell branded products to various industries". Micron Technology, Samsung, and SK Hynix are all major suppliers of Longsys, from which the company procures wafers for processing.

Currently, Longsys owns three major brands and four product lines, mainly covering four categories of storage hardware products: personal consumer electronics, automotive manufacturers, large-scale internet server enterprises, and surveillance and industrial control companies.

Longsys' core business is primarily supported by the FORESEE brand, a leading domestic B-end brand whose products include mobile embedded storage (eMMC, UFS), in-vehicle DVR/infotainment system storage, industrial surveillance hard drives, smart IoT hardware memory, and industrial control equipment storage modules.

Many of the storage products built into domestic Android smartphones, ride-hailing in-vehicle large screens, community surveillance cameras, and express delivery barcode scanners are produced under the FORESEE brand. The TO B business is an anti-cyclical foundational operation, with designated orders from government, enterprise, and automotive clients that can underpin the company's minimum revenue baseline.

For products that consumers are most likely to encounter directly, such as DSLR camera memory cards, drone memory cards, portable solid-state U disks, and high-speed hard drives dedicated to photography, many of the storage components come from Longsys' Lexar brand. For example, the 128G high-speed SD cards commonly used by photographers and large-capacity portable hard drives for outdoor shooting are mostly high-end choices from Lexar.

Longsys' third major brand is Zilia, which focuses specifically on the Brazilian and Latin American markets, emphasizing localized production and sales in South America to manufacture storage products compatible with local computers, mobile phones, and home appliances. This brand allows the company to avoid cross-border tariffs, achieve localized production and sales directly, and fill gaps in its global sales network.

Among the above brands, both Lexar and Zilia were acquired by Longsys. Zilia is a local Brazilian brand, in which Longsys took a controlling stake in 2023 and announced a full acquisition in 2025. The Lexar brand, which previously belonged to Micron Technology, was sold to Longsys back in 2017.

At the 2026 CES exhibition, the Lexar brand officially signed a sponsorship agreement with the Argentina national football team, the defending World Cup champions, becoming the team's first official global partner for 2026. The two sides launched co-branded storage products with the Argentine national team, including the Air compact portable drive and the SL500 portable solid-state drive. With Lionel Messi on its roster, the Argentine national team has hundreds of millions of fans worldwide, and Longsys hopes to use this cooperation to further expand its brand influence in the global market.

Image source: Longsys financial report 

However, although Longsys has established a profit-generating system covering the global market, its ability to maintain growth in the future will likely depend on the end-side market, such as products including AI smartphones, AI vehicles, AI computers, and even robotic applications. These are the ultimate commercialization scenarios that large model developers are seeking to realize.

If the company can successfully open up these application scenarios in the future, the end-side market space will be extremely vast, and Longsys can further solidify its market position amid surging market demand. Otherwise, investors should prudently reassess the company's future growth ceiling.

This article is from the WeChat official account "Alpha Workshop Research Institute", written by Alpha, and authorized for release by 36Kr.