As the pace of DRAM contract price increases slows and the long-term ROI of AI capital expenditure is reassessed by the market, the "forward premium" embedded in storage company valuations is being gradually squeezed out, which is the core reason behind the current correction in the storage sector.

From an investment analysis perspective, industry prosperity cannot substitute for judgment on individual operating capabilities. While observing price elasticity, the storage sector's transition from a "beta market" to "alpha screening" will become inevitable, and market pricing logic will shift from price increase expectations to identifying whether storage companies can achieve long-term stable development.

Against this backdrop, HOSIN ELEC (02681), which officially launched its IPO subscription on October 30, provides a sample worth examining: alongside rapid profit growth, the company continues to advance R&D in controller chips and storage products, making it a representative enterprise under the current "alpha screening" logic.

According to Zhitong Finance APP, HOSIN ELEC plans to globally offer 14.7172 million H shares in this IPO. Of these, Hong Kong public offering accounts for approximately 10%, international offering accounts for approximately 90%, with an additional 15% over-allotment option. The offer price range is HK$72.29-82.9 per share, with each lot comprising 100 H shares. The H shares are expected to commence trading on the Stock Exchange at 9:00 a.m. on November 12 (Thursday).

Furthermore, HOSIN ELEC has introduced 7 cornerstone investors in this IPO, collectively subscribing to approximately HK$452 million worth of H shares, including two industrial capital investors — Transsion International Limited and Longsys Investment Limited. This represents direct endorsement from downstream customers and industry peers for HOSIN ELEC's controller chip and storage module technological capabilities.

The cornerstone investors' genuine financial support essentially stems from recognition of HOSIN ELEC's business model and profit quality. Under its asset-light operating model, HOSIN ELEC possesses strong steady-state profitability, and the resilient durability of this profitability is clearly evidenced at both ends of the industry cycle.

2023 can be described as the cyclical bottom for the global storage industry, yet during this year, HOSIN ELEC incurred a loss of only RMB 117 million, with a net margin of -1.33%, significantly outperforming peers, while many competitors recorded losses several times larger than HOSIN ELEC's.

If the remarkable resistance demonstrated during the industry downturn represents one facet of HOSIN ELEC's steady-state development resilience, then the company's steep profit elasticity during the upcycle provides another angle for observing its operating performance. Benefiting from the AI industry's vigorous development driving the storage industry into a high-prosperity cycle, HOSIN ELEC achieved a turnaround to profitability in 2024, recording a net profit of approximately RMB 483 million, which further increased to RMB 1.364 billion in 2025, and achieved a net profit of RMB 3.841 billion in the first four months of 2026 — already 2.82 times the full-year net profit of 2025.

This "small drawdown, large elasticity" steady-state profitability stems from the company's asset-light strategy of primarily outsourcing wafer processing, packaging, and testing to third-party manufacturers. This model reduces the capital investment needed for building in-house wafer manufacturing and packaging/testing capacity, allowing resources to be concentrated on core areas such as product definition, controller R&D, and quality management, maintaining operational flexibility amid cyclical fluctuations, and ultimately achieving asymmetric returns of downside resistance and upside operating leverage release.

This concentrated resource allocation approach enables the company to maintain counter-cyclical R&D intensity during cyclical fluctuations. From 2023 to 2025, HOSIN ELEC's R&D expenses were approximately RMB 283 million, RMB 392 million, and RMB 493 million respectively, totaling approximately RMB 1.168 billion over three years. With sustained high-intensity R&D investment, HOSIN ELEC has built four major technology platforms: controller chip design, firmware algorithms, testing systems, and storage media characterization analysis, accelerating the conversion of technological reserves into product dividends.

This conversion is mainly reflected in three aspects: First, controller chip autonomy. HOSIN ELEC has become one of the few independent storage manufacturers in China with the capability to independently design, develop, and commercialize controller chips. The company has mass-produced multiple self-developed controllers, with another 8 in the sampling, tape-out, and design stages, covering UFS, eMMC, USB, and PCIe SSD directions.

Second, software-hardware synergy builds technological barriers. The synergy between self-developed controllers and firmware algorithms helps improve product read/write performance, power consumption control, and cost structure, forming HOSIN ELEC's solid technological moat.

Third, the reusability of technology platforms supports scenario expansion. Based on the four major technology platforms, HOSIN ELEC has achieved accelerated extension from its consumer electronics base to automotive-grade, enterprise-level, and AI storage scenarios, building a cross-cycle product matrix.

In the consumer electronics field, HOSIN ELEC covers leading brands including Xiaomi, Transsion, OPPO, vivo, TCL, and Xiaodu. As some customers extend into the automotive industry, HOSIN ELEC entered automotive-grade storage in 2023 and entered the Tier 1 supply chain, broadening application scenarios beyond consumer electronics.

Meanwhile, the company's enterprise-level SSDs have been mass-produced and deployed, and AI server demand has driven DRAM revenue share to rapidly increase from 1.3% in 2023 to 24.8% in 2025, constituting a third growth curve after consumer electronics and automotive-grade.

It can be seen that HOSIN ELEC's steady-state profitability does not rely solely on storage price increases, but more on the accumulation of product definition power and technological barriers, which has formed a significant distinction from module manufacturers that rely purely on processing and assembly. With profit resilience under the asset-light model and the continuous release of R&D-driven technology dividends, HOSIN ELEC attracting strong capital pursuit during the IPO subscription stage is likely to be a high-probability event.