AI computing power has turned optical modules into a red-hot sector, and LIGENT (HK: 09856), a top-five global specialist in the field under the Hisense umbrella, is now knocking on the Hong Kong stock market's door. It's bringing 26 cornerstone investors and nearly HK$2.7 billion in locked-up funds to its IPO. The track is hot, the cornerstones are solid, and there's even a path to Stock Connect eligibility. However, its closest comparable, Zhongji Innolight, broke below its issue price right after listing, and LIGENT's earnings include a one-off gain of HK$350 million. So, is this one worth chasing?
Offer details: The green shoe is set at 15% (about 25.8 million shares), with CLSA acting as the stabilizer. Net proceeds are around HK$5.445 billion (assuming no over-allotment rights are exercised), with the bulk earmarked for R&D (52.9%) and capacity expansion (25.1%).
What exactly does the company do? LIGENT is one of the few manufacturers globally that develops both optical modules and optical chips in-house, with products spanning AI data centers, telecom transmission, and broadband access. In 2025, it held a 4.0% global revenue share by optical module sales, ranking fifth, with a 10.1% share in China, ranking third. Hisense Group owned 48.61% before the offering, and post-listing, LIGENT will become the sixth listed entity under the Hisense banner. The real growth engine is the data-communications optical module segment (sold to cloud vendors and AI compute centers), where revenue jumped from RMB 1.056 billion in 2023 to RMB 5.469 billion in 2025, lifting its revenue share from 24.9% to 65.5%.
Financials show a profit quality issue. The 2025 net profit of RMB 873 million looks solid on the surface, but RMB 353 million of that stems from a one-time gain on the sale of a joint venture. Stripping that out, operating net profit lands at roughly RMB 519 million, translating to a net margin of just 6.2%. The optical chip segment is still bleeding: it posted gross margins above negative 120% for two straight years, and relying on internal supply makes it a near-term drag. Customer concentration is also high, with the top five accounting for 70.2% of revenue and the largest single customer at 21.8%, plus there are related-party transactions with Hisense.
Comprehensive assessment. The sector is a plus: optical modules are the "blood vessels" of AI computing, the industry outlook is strong, and LIGENT holds a top-five global position. The valuation is neutral to rich: the issue market cap is around HK$32.4 billion, implying a PE of roughly 34 times based on reported 2025 net profit, or about 57 times on adjusted earnings. For comparison, leading peer Zhongji Innolight (A-share) trades at around 65 times PE. As a smaller player, LIGENT's discount looks reasonable, but 57 times on adjusted earnings isn't cheap either, and that's after multiple rounds of pricing adjustments to reflect current conditions. The 26 cornerstone investors, subscribing for HK$2.666 billion and covering about 47% of the global offering, are a clear positive. The biggest red flag: Zhongji Innolight (03308.HK) broke below its issue price on its first trading day on July 30, including in the dark pool, despite the same hot optical module story and similarly strong cornerstone backing. Sector sentiment is currently frigid, which is the most significant reference risk for LIGENT.
Subscription probability outlook: The Hong Kong public offering comprises 172,000 lots, making this a large-scale IPO. The tail-end tranches (A tail) should secure stable allotments.
Rating: 4 out of 5 stars. The four stars are earned by a red-hot sector, 47% cornerstone lock-up, Stock Connect expectations, and the green shoe option. But the word "caution" must be emphasized: Zhongji Innolight's post-listing stumble, the diluted earnings quality, and the not-so-cheap valuation all warrant a measured approach.