{"text":[[{"start":7.25,"text":"What does it take to become a dragon? If your name is Longsys Electronics Co. Ltd. (301308.SZ), the answer is simply being in the right place at the right time. In this case, Longsys just happens to be right in the middle of a red-hot market for memory chips and related products, which have lately become investor darlings on spiking prices as the latest group of AI concept stocks."}],[{"start":30.85,"text":"Memory chips are playing a pivotal role as AI looks poised to dominate the future, making stocks of related companies into hot commodities. Shares of GigaDevice (3986.HK; 603986.SH) have more than quadrupled since their IPO in January, while Montage Technology (6809.HK; 688008.SH) has nearly tripled since its debut a month later. Longsys’ Shenzhen-listed A-shares have done equally well, skyrocketing more than sixfold over the past year."}],[{"start":68.85,"text":"The company’s Hong Kong listing attempt follows a recent pattern that has seen many Chinese firms already listed on domestically-focused markets in Shenzhen and Shanghai making second listings in Hong Kong to target the city’s more international investor pool."}],[{"start":82.55,"text":"The late Hong Kong stock commentator Cho Yan Chiu once famously remarked that “Riding the momentum beats relying on wisdom.” Longsys perhaps understands this best. Its initial Hong Kong listing application stumbled last year. But that may have worked to its advantage, as memory stocks have soared this year in tandem with soaring memory chip prices. Sensing an opportunity, the company refiled its listing application with the Hong Kong Stock Exchange at the end of last month."}],[{"start":112.1,"text":"Longsys is an independent maker of memory storage products. It was the world's second largest independent semiconductor memory product maker by storage product revenue last year, and ranked first in China, according to third-party market research in its listing document."}],[{"start":126.85,"text":"That document shows the company's business has been on a strong upward trajectory over the past three years, in tandem with the AI boom. Its revenue more than doubled from 10.13 billion yuan ($1.5 billion) in 2023 to 22.77 billion yuan last year, including 30% year-on-year growth in 2025. Over that time, it swung from a net loss of 816 million yuan in 2023 to a profit of 209 million yuan in 2024. Its profit then surged to 1.5 billion yuan last year as memory prices boomed."}],[{"start":166.25,"text":"Twin founders"}],[{"start":167.8,"text":"Established in 1999, Longsys has evolved from a small stall on Huaqiang North Road in the then-sleepy boomtown of Shenzhen into a massive enterprise with a market capitalization of 250 billion yuan. Founder Cai Huabo boasts neither a degree from a prestigious university nor a resume from a multinational corporation. After graduating from high school, he traveled alone from East China’s Jiangxi province to Shenzhen to try his luck."}],[{"start":195.95000000000002,"text":"Three years later, he and twin sister Cai Lijiang scraped together enough money to launch their business. Auspiciously born in the Year of the Dragon, they combined the last character of each of their names, Jiang and Bo, with the “long” character for dragon, to create their company’s Chinese name, Jiangbolong."}],[{"start":214.25000000000003,"text":"Longsys started out as a chip trader. But market challenges by 2002 made it difficult to sell their chips, prompting them to turn their inventory into USB flash drives. The timing coincided with the rise of Apple's iPod, which drove massive demand for flash memory chips, not only reversing Longsys’ fortunes but also lifting it to big profits. That success prompted Cai Huabo to try his hand at manufacturing instead of simple trading. In the early days, the company focused on original equipment manufacturing (OEM), making products for other brands. But later Cai became determined to establish his own brand, which typically carriers much higher margins than OEM production."}],[{"start":255.95000000000005,"text":"In 2012 the company began building its Forsee memory brand, and continued to expand from there. Along the way, it acquired the Lexar brand from U.S. memory chip maker Micron (MU.US), then purchased Smart Brazil, and subsequently launched the new Zilia brand. Over the years, the company has developed an integrated model that combines product development, as well as packaging and testing."}],[{"start":280.50000000000006,"text":"Forsee ranked second among independent memory brands, based on its B2B sales of storage product revenue last year; Lexar also ranked second among independent B2C memory brands. Meanwhile, Zilia has been a standout in Latin America, building a position as the region’s largest independent memory brand last year."}],[{"start":301.30000000000007,"text":"Inflated stock"}],[{"start":302.8500000000001,"text":"While Longsys is already a leading player in the memory space and has become popular among investors, it remains to be seen whether its lofty share price is justified or perhaps just a tad ahead of its time."}],[{"start":316.25000000000006,"text":"The company’s Shenzhen-listed stock soared from 70 yuan to more than 500 yuan in just a year, giving it an inflated price-to-earnings (P/E) ratio of 163. The speed and scale of its surge have been largely driven by the AI narrative. Market capital has swarmed in to seize on the momentum, pushing the stock to nosebleed levels in a very short time."}],[{"start":341.75000000000006,"text":"While demand for memory products certainly exists, is it possible investor optimism is overblown? The company’s ability to keep boosting profits at a rapid clip to justify the high valuation remains an open question. But the lofty valuation is an undeniable fact. Even a slight stumble in its growth makes the likelihood of a major stock correction quite high."}],[{"start":364.75000000000006,"text":"High debt pressure"}],[{"start":366.6000000000001,"text":"What’s more, the company’s financials also seem to include some warning signals that may warrant attention. Its liabilities are by no means low, and its debt-to-equity ratio has been climbing steadily, rising from 112% in 2023 to 172% last year."}],[{"start":383.80000000000007,"text":"Its interest-bearing long-term bank borrowings reached 4.38 billion yuan last year, up 74% year-over-year. Interest-bearing bank borrowings with short-term durations have grown equally fast over the past three years, nearly doubling from 3.17 billion yuan in 2023 to 6.1 billion yuan last year. At the same time, its cash stood at just 1.47 billion yuan at the end of last year, well below its short-term liabilities."}],[{"start":414.75000000000006,"text":"Another warning sign comes from the company's inventory levels, which have continued to mount. Inventory grew from 5.89 billion yuan in 2023 to 7.83 billion yuan the next year, and climbed further to 11.68 billion yuan in 2025. Last year’s rise of nearly 50% alone was also notable because it significantly outpaced Longsys’ 30% growth that year."}],[{"start":440.30000000000007,"text":"The company’s cash flow is also less than ideal. Over the past three years, the company has consistently recorded net cash outflows from operating activities of 2.8 billion yuan, 1.19 billion yuan, and 1.2 billion yuan, respectively."}],[{"start":459.55000000000007,"text":"Its steady cash outflows and elevated debt are manageable for now as the memory market booms and Longsys’ stock keeps touching new records. But all that could quickly change if the memory chip industry crests and starts to subside, or if the market’s voracious appetite for AI stocks starts to wane."}],[{"start":486.05000000000007,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1780920538_1517.mp3"}