Since September 2025, the global memory chip market has witnessed widespread price increases, with several major players announcing hikes. DRAM product prices have generally risen by 15%-30%, while NAND flash prices have increased by 5%-10%. This surge in prices across all storage categories is attributed to the explosive demand generated by AI, which has drastically increased the consumption of memory (DRAM) and storage (NAND Flash) compared to traditional servers. Consequently, international memory giants have adjusted their strategies by reducing production capacity for traditional process products and reallocating resources to high-end products such as DDR5 and HBM. This strategic shift has led to supply shortages in mid-range and low-end storage products, ultimately driving up prices across the board. Market expectations suggest that this price increase trend may continue until 2026, boosting investor confidence in the future profitability of memory chip companies. Since September, stocks in the storage sector have surged, with companies such as Shannon Semiconductor Technology Co., Ltd. (300475.SZ), Shenzhen Techwinsemi Technology Co., Ltd. (001309.SZ), and Shenzhen Longsys Electronics Co., Ltd. (301308.SZ) seeing their prices double in just a month.

Rayson HI-TECH(SZ) Co., Ltd., based in Shenzhen, is now targeting the capital market amid this industry price surge. According to reports, the company submitted its main board listing application to the Hong Kong Stock Exchange on September 29, with招商證券國際 and 國泰君安國際 serving as co-sponsors. As of October 13, Rayson HI-TECH further appointed 東方證券（香港）有限公司, 浦銀國際孖展有限公司, and 華富建業證券有限公司 as overall coordinators for its IPO.

The prospectus reveals that Rayson HI-TECH is a leading independent manufacturer of embedded storage products, focusing on the research, design, production, and sales of embedded and other storage products. From 2022 to 2024, it reported revenues of RMB 2.096 billion, RMB 2.402 billion, and RMB 3.714 billion, with corresponding net profits of RMB 44.417 million, RMB 37.013 million, and RMB 88.887 million. In the first half of 2025, the company's revenue reached RMB 2.060 billion, representing a 19.28% year-on-year increase, while net profit declined by approximately 5.7% to RMB 115 million.

Can Rayson HI-TECH leverage the industry's price surge to achieve a high valuation during its IPO? The company's prospectus may hold the answer. With continuous and rapid product sales growth leading to steady performance increases, Rayson HI-TECH has been deeply involved in the storage industry since its establishment in December 2016, consistently focusing on the R&D, design, production, and sales of embedded storage products. It has developed two key brands: RAYSON® and ARTMEM®. Currently, the company's embedded storage product lineup includes DRAM-based products (DDR, LPDDR), NAND Flash-based products (eMMC, UFS), and Multi-Chip Package (MCP) products (eMCP, uMCP, ePOP). Additionally, the company sells other products, including solid-state drives and memory modules, while also providing testing and storage technology services to some clients as a complement to its storage solutions.

According to the prospectus, in 2024, DRAM-based products, NAND Flash-based products, and MCP embedded storage products contributed 66.6%, 18.1%, and 8.4% of total revenue, respectively, while solid-state drives, memory modules, and testing services accounted for 6.8%. Clearly, DRAM-based products are Rayson HI-TECH's primary revenue source. The company stated that its products are applicable in various consumer electronics fields, including smartphones, laptops, tablets, educational electronics, smart homes, wearable devices, and intelligent robots, as well as in diverse industrial sectors and smart cockpit systems.

From a sales channel perspective, Rayson HI-TECH employs a dual-driven model of direct sales and distribution. By mid-2024, direct sales and distribution revenues accounted for 41.1% and 58.9%, respectively. Between 2022 and 2024, both sales channels demonstrated a continuous upward trend. Geographically, Rayson HI-TECH's products are primarily sold to mainland China and Hong Kong, where, in 2024, revenues from mainland China and Hong Kong represented 38.9% and 59.5%, respectively, with 1.2% from South Korea and 0.4% from other countries and regions. Notably, the majority of products shipped to Hong Kong are purchased by clients from mainland China, indicating that Rayson HI-TECH primarily serves the domestic market.

In terms of performance, the continued revenue growth from 2022 to 2024 can be attributed to the rapid increase in sales of both DRAM-based and NAND Flash-based products, alongside the growth of other income sources, including solid-state drives, memory modules, and testing services. This trend continued into the first half of 2025. The sustained sales growth of Rayson HI-TECH's DRAM-based and NAND Flash-based products primarily stems from a significant increase in product sales volume, with DRAM product sales rising from 43,874 tons in 2022 to 95,702 tons in 2024, and NAND Flash product sales increasing from 9,494 tons to 41,611 tons in the same period. Although prices have fluctuated, Rayson HI-TECH has managed to achieve continuous revenue growth through accelerated mass shipments, effectively mitigating price volatility. This trend also supported revenue growth in the first half of 2025.

As sales continue to climb rapidly, economies of scale are becoming evident, with Rayson HI-TECH's gross margin steadily improving from 7.6% in 2022 to 9.2% in 2024. However, net profit margins exhibited some fluctuation, recorded as 2.1%, 1.5%, and 2.4% during the same period, primarily due to a decrease in other income in 2023 and an increase in administrative and other operational expenses impacting the net profit. Furthermore, in the first half of 2025, despite a 19.28% increase in revenues to RMB 2.060 billion, net profit declined by approximately 5.7% to RMB 115 million. This decline was also attributed to foreign exchange losses and increased sales, marketing, administrative, and operational expenditures.

In the short term, the release of inventory dividends is expected to drive high earnings elasticity, though medium- to long-term challenges remain. From an industry perspective, the current storage sector may have entered a new phase of development. According to Frost & Sullivan, the market size experienced a temporary decline due to the pandemic's impact between 2020 and 2024, but the transition of AI models from single-modal to multi-modal has radically spurred data storage demand. Simultaneously, the upgrade of electronic products enabled by AI will drive the need for high-performance, low-power storage, while smart developments in the automotive and industrial sectors will also drive demand for storage products. They estimate that the global semiconductor storage market size (measured by shipment volume) will grow to 19.4 billion units by 2029, with a compound annual growth rate (CAGR) of 7.1% from 2024 to 2029, significantly up from a 1.8% CAGR in the previous five years, indicating accelerated market growth. Embedded storage products are expected to grow slightly faster than the overall market, at a 7.4% annual CAGR.

The prospectus shows that in terms of shipment volume calculated in 2024, Rayson HI-TECH ranks second among global independent manufacturers of embedded storage products, with 14 million units shipped, and ranks first among the top five LPDDR independent manufacturers with 5.91 million units shipped. Clearly, Rayson HI-TECH already possesses some scale in its segmented product lines and stands to benefit significantly from rapid industry demand growth. Currently, due to strategic adjustments in product structure by memory giants that have led to structural supply shortages, Rayson HI-TECH can directly benefit from increased value of its inventory in the short term. Industry data indicates that during price increases, storage module companies can realize profit release through inventory cycles. Especially for second-tier manufacturers, their flexibility allows for greater performance elasticity. The release of inventory dividends is expected to enhance Rayson HI-TECH's gross margin.

According to the prospectus, Rayson HI-TECH's inventory values were RMB 682 million, RMB 873 million, RMB 1.162 billion, and RMB 2.001 billion for 2022, 2023, 2024, and the first half of 2025, respectively, comprising approximately 65.6%, 58.1%, 50.0%, and 61.6% of current assets for each period. Such a high level of inventory is expected to allow Rayson HI-TECH to enjoy significant operational elasticity in the short term. However, from a medium-term perspective, upstream wafer manufacturers (such as ChangXin Memory Technologies and Yangtze Memory Technologies Corp) may prioritize supply for large customers during this pricing cycle, putting pressure on smaller module manufacturers regarding raw material procurement and price fluctuations. In this scenario, Rayson HI-TECH will need to procure wafers at higher prices, while the transmission of product prices to downstream customers may lag, potentially squeezing gross margins. Additionally, stocking up at high prices will require more capital, which could exacerbate cash flow pressure.

In the long run, given the current international context, the trend towards domestic production in the storage industry is becoming increasingly pronounced. However, industry differentiation may accelerate, driven by the logic that the price surge cycle forces resources to concentrate upstream, causing a tiered split among mid-tier module manufacturers. Rayson HI-TECH must establish differentiated competitive barriers through continuous technological upgrades and market focus; otherwise, it may face pressure from leading enterprises over a longer term.

Moreover, the turnover days for trade payables and receivables indicate Rayson HI-TECH's low bargaining power with upstream and downstream suppliers. The prospectus shows that from 2022 to 2024, the turnover days for trade payables were 10, 12, and 14 days, while for trade receivables, the turnover days were 26, 37, and 54 days, respectively. The significantly longer turnover days for receivables compared to payables and the discernible trend in lengthening are detrimental to Rayson HI-TECH’s rapid capital turnover, thereby necessitating debt increase for expansion. As of June 30, 2025, Rayson HI-TECH's debt-to-asset ratio stood at 78%, a 6-percentage point increase compared to 2022. The pronounced increase in turnover days for trade receivables is closely related to its high customer concentration. The prospectus indicates that revenues from the top five customers accounted for 49.7%, 45%, and 49.3% of total revenue from 2022 to 2024. High customer concentration weakens Rayson HI-TECH's bargaining power and poses a potential risk of operational disruption should major clients withdraw.

Overall, Rayson HI-TECH has achieved steady growth in recent years. Now that the storage industry has entered a pricing cycle, the company is expected to leverage its substantial inventory for high earnings elasticity. Still, it faces challenges regarding mid-term cost and capital pressures, while long-term strategies for establishing differentiated competitive barriers also need exploration. Additionally, investors should closely monitor risks such as high customer concentration and lengthening accounts receivable turnover days.