The largest IPO on the Hong Kong stock market this year: Will the valuation of Zhongji Xuchuang be reshaped?

Innolight's Hong Kong IPO is priced at a discount, demonstrating extremely strong capital attraction. It has not only drawn funds from Temasek, Alibaba, Tencent and other parties to gather at this "optical module leader", but also is highly likely to set the largest Hong Kong IPO record of the year. 

On July 22, Innolight (300308.SZ/3308.HK) officially launched its public offering in Hong Kong, with a maximum issue price of HK$1010 per share and an estimated base fundraising of about HK$55 billion. If the over-allotment option is fully exercised, the maximum fundraising can reach HK$63.3 billion! The prospectus clarifies that the offering period runs from July 22 to July 27, with pricing expected on July 28 and listing scheduled for July 30. 

Data from Eastmoney Choice shows that since the beginning of this year, a total of 100 companies have listed on the Hong Kong Stock Exchange, with cumulative IPO proceeds (including over-allotment) reaching HK$273.355 billion. Among them, Luxshare Precision, Shenzhen Hongfa Technology, Muyuan Foods and Dongpeng Beverage recorded IPO proceeds (including over-allotment) of HK$24.266 billion, HK$23.135 billion, HK$12.099 billion and HK$11.099 billion respectively. 

By comparison, Innolight has the largest fundraising scale, and it is likely to surpass the previous fundraising scale of CATL, becoming the largest technology IPO in Hong Kong since Alibaba's secondary listing in Hong Kong in 2019. 

According to data from CIC, Innolight has ranked first in terms of revenue scale in the global optical interconnection solutions market for five consecutive years since 2021. Data from LightCounting shows that Innolight's global market share in 2025 is about 21.2%, far exceeding the 14% of the second-ranked player. 

In the high-end product segment, Innolight holds approximately 40% of the global market share for 800G optical modules, and 50%-70% for 1.6T optical modules. It is a core supplier for NVIDIA Blackwell architecture servers (Blackwell refers to the GPU architecture designed by NVIDIA for next-generation AI and accelerated computing workloads). 

At present, Innolight's A-share market value has long exceeded one trillion yuan, but for this H-share issuance, the market's focus is no longer limited to the category of "another technology company listing in Hong Kong". Behind this IPO, 33 cornerstone investors have poured HK$27 billion, and the signals conveyed by their lineup are even more noteworthy. 

01. 23% AH Discount: The Game of Valuation Anchor

The most notable point for investors in this IPO is the significant price gap between the H-share issue price and the current A-share price, as well as the resulting valuation anchor game. 

As of the A-share market close on July 21, Innolight's share price stood at 1136.55 yuan per share, with a total market value of about 1.27 trillion yuan. Converted at the exchange rate of the day, the A-share price is equivalent to about HK$1317 per share. 

The maximum H-share issue price is HK$1010 per share, representing a discount of about 23.3% to the current A-share price. If the final pricing is set below the upper limit, the discount margin will be even larger. 

It should be noted that price gaps between A+H shares are a common phenomenon, as the two markets differ in investor structure, liquidity and valuation systems, and the price gap will not automatically converge. However, for an industry leader like Innolight, the discount margin still deserves attention. 

A more reference-worthy comparison comes from the valuation levels of global peers in the same industry. 

BOCOM International Securities set a target price of 1600 yuan for Innolight, corresponding to 32x 2027 P/E ratio, and stated that "compared with overseas optical module/optical communication companies, Innolight also has a noticeable valuation discount." 

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

However, as of July 21, Innolight's A-share P/E ratio is about 109x, still at a historically high level. High valuation means high expectations. Once the performance growth rate falls short of expectations, or the industry prosperity changes marginally, there will be considerable room for valuation correction. The discounted H-share issuance itself may also exert certain anchoring pressure on the high A-share valuation. 

It is worth noting that in terms of gross margin, Innolight's optical module business recorded about 42% (2025 data), which is not inferior to global leading optical chip companies Lumentum and Coherent. This contrast of "leading position + lower valuation" makes international capital pay extra attention to Innolight. 

On July 17, Goldman Sachs released its latest research report, directly raising Innolight's 12-month A-share target price from 1187 yuan to 2581 yuan, an increase of over 117%, which sparked widespread discussion in the investment community. 

The core reason for Goldman Sachs' upward revision is not a short-term performance explosion, but the belief that the optical module industry is shifting from the 800G stock cycle to a new round of profit cycle driven by new 1.6T/3.2T technologies, and the company's long-term profit center needs to be repriced. Specifically, the continuous upgrade of NVIDIA AI servers is accelerating the iteration of optical modules from 800G to 1.6T and even 3.2T, and Innolight, with its first-mover advantage in the silicon photonics field and global leading position, will be a core beneficiary in this round of technology upgrade. 

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

02. What Are the Differences in Attitudes Among the 33 Cornerstone Investors?

This IPO has introduced 33 cornerstone investors, with a total subscription of about USD 3.45 billion (about HK$27 billion), subject to a 6-month lock-up period, accounting for nearly 50% of the base fundraising scale, representing a fairly high lock-up ratio. 

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

Such funds are characterized by long cycles, low risk appetite, and focus on long-term fundamentals. Their large-scale entry indicates that Innolight's industry leading position and long-term growth logic have been recognized by the world's most robust capital, rather than being pure theme speculation. 

The capital from top international asset management institutions represents the attitude of the international mainstream pricing power, including HHLRA under GL Ventures, JPMorgan Asset Management (JPMAM), BlackRock, Wellington Management and others, all of which are among the world's top asset managers. 

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

Finally, there is industrial capital, which sends a signal of industrial chain synergy. 

Alibaba and Tencent each subscribed USD 50 million, which is not the largest amount, but carries special signal significance. As the two largest cloud vendors in China, they are downstream customers of optical modules themselves. The participation of industrial capital in subscription, on the one hand, demonstrates recognition of the core upstream supplier, and on the other hand, may imply expectations for deeper industrial chain cooperation in the future. 

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

Overall, the cornerstone lineup can be described as an "all-star level" with comprehensive coverage of capital types, forming strong support for the stock price in the early stage of listing. 

03. Where Will the HK$55 Billion Raised Funds Be Directed?

According to the disclosure in the prospectus, the net proceeds will be allocated in the following proportions (within the next five years): 

•35% (about HK$19 billion): Continuous investment in R&D of optical interconnection products 

•30% (about HK$16.3 billion): Expansion of global production capacity to support the product upgrade roadmap 

•15% (about HK$8.2 billion): Strategic acquisitions and investments 

•10% (about HK$5.5 billion): Enhancement of supply chain resilience and commercialization capabilities 

•10% (about HK$5.5 billion): Working capital and general corporate purposes 

It is worth noting that 30% of Innolight's raised funds will be used for capacity expansion, but the expansion targets are not the 800G products that are seeing price cuts, but the higher-end 1.6T and next-generation 3.2T products. High-end products are still in short supply at present, and the company has high order visibility due to its deep tie with NVIDIA. This is a kind of "structural capacity expansion", rather than blind expansion across the entire product line. 

The Goldman Sachs research report also mentioned that the company's capital expenditure in 2026 will surge 155% year-on-year, mainly to undertake high-speed optical module orders. 

In addition, Innolight plans to use 15% of the raised funds for strategic acquisitions, which has sparked investors' speculation: what is the most likely direction for its acquisitions? 

Judging from the current industry technology iteration, there are 3 most notable categories: first, silicon photonics technology-related areas — silicon photonics is the core technology route for next-generation optical modules, and acquiring related chip or design companies can strengthen technical barriers; second, CPO (co-packaged optics) — if the CPO technology route matures faster, advance layout can avoid being disrupted; third, upstream optical chips — extending upstream to enhance supply chain independent controllability and gross margin. 

Innolight's Hong Kong IPO is an excellent window to observe the global AI computing power industry chain. The HK$55 billion fundraising scale, all-star cornerstone lineup, and significant AH discount all make this IPO destined to be one of the most important events in the Hong Kong stock market in 2026. 

The listing on July 30 is just the beginning, and the real test comes after listing. 

This article is from the WeChat public account "Alpha Workshop Research Institute", author: Alpha, published with authorization from 36Kr.