---
title: "[Hong Kong IPO] Tracking Secondary New Stocks: Zhongji Innolight A-Share Reduction of 5.3 Billion, Hong Kong Share Increase of 2.7 Billion — How to Interpret These Two Announcements"
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/43176556.md"
description: "Just a quick rant: the preview of Shein's IPO I wrote in my public account yesterday was reported and taken down. I actually quite like this company. After all, as an IPO subscriber, before seeing the prospectus and understanding the pricing, cornerstone investors, and issuance structure, I felt that based on the current information, there was still potential for profit. Moreover, my attitude yesterday was very neutral; I mentioned both pros and cons and didn't do anything to you, yet PR shills reported me, which really damages my reputation among passersby. Anyway, let's not dwell on the unpleasant stuff. Today tech stocks rebounded, especially A-shares performed particularly brightly (finally a day without getting beaten up)..."
datetime: "2026-08-04T08:34:30.000Z"
locales:
  - [en](https://longbridge.com/en/topics/43176556.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/43176556.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/43176556.md)
author: "[新股资本](https://longbridge.com/en/profiles/2064959292688433152.md)"
generator: "portal-rs"
---

# [Hong Kong IPO] Tracking Secondary New Stocks: Zhongji Innolight A-Share Reduction of 5.3 Billion, Hong Kong Share Increase of 2.7 Billion — How to Interpret These Two Announcements

Let me vent for a moment. The preview of Shein's IPO I wrote in the public account yesterday was reported and taken down. I actually quite like this company. After all, as an IPO subscriber, before seeing the prospectus and without understanding the pricing, cornerstone investors, and issuance structure, I felt that based on the current information, there was still potential to make some profit. Moreover, my attitude yesterday was very neutral; I discussed both the pros and cons, and didn't do anything to you, yet PR shills reported me. It really damages their reputation among the public.

Okay, let's not talk about these frustrating things. Today tech stocks rebounded broadly, especially A-shares which performed particularly brightly (finally a day without getting beaten up). In the afternoon, Korea also pulled hard with all its might. Taking advantage of the good market sentiment, plus no new IPOs again, I want to chat with everyone about Zhongji, this recent new stock (I'm of course talking about Hong Kong stocks; among recent new stocks, only Zhongji is relatively hot).

Today is the fourth trading day since Zhongji's listing in Hong Kong. This morning, it surged to 1188 during trading, while just last Friday it had broken issue price. There isn't much to say in detail about the breakage—the pricing wasn't cheap to begin with, and A-shares weakened throughout the prospectus period, grinding away almost all of the 21% discount. Breaking issue price is normal, let's move on.

**Now that it is a recent new stock, what we look at is completely different.** We don't care anymore about what matters for IPO subscription; for recent new stocks, a very important point to watch is who holds the chips and how long they plan to hold them.

**Signal One: On the day of breaking issue price, someone took over 2.7 billion at the issue price.**

**On July 30, the first day of breaking issue price, The Capital Group increased its holdings by 2.757 million shares at an average price of HKD 980.00 per share, totaling approximately HKD 2.702 billion.**

This news was only disclosed through the SFC interest disclosure on the evening of August 3, and the next day the stock price opened high with a gap. How to interpret it, I divide it into three layers:

**Layer one, the average price of 980 is the issue price.** On that day, H-shares opened at 971, touched a low of 880 intraday, and closed at 960. For most of the day, it traded below the issue price. It wasn't chasing highs; it was buying at the issue price where others were panic-selling.

**Layer two, doing the math makes it more intuitive.** 2.757 million shares correspond to 5.06%, implying a total H-share capitalization of approximately 54.5 million shares—this exactly matches the size of this issuance. **That is to say, Capital Group alone absorbed about 5% of the H-share issuance volume.**

**Layer three, we need to see what kind of money this is.** Capital Group is one of the world's largest active management firms, with assets under management measured in trillions of dollars, typical long-term allocation capital that does not engage in day trading, with holding periods usually measured in years. **The logic behind such institutions' position building is different from arbitrage funds;** arbitrageurs profit from the AH price spread, and once the spread disappears, they leave; the anchor for long-term money is how much this company can earn in the coming years. Whether 980 is expensive has little to do with whether the discount has converged.

**The number 5.06% has an additional significance: it just crossed the 5% disclosure threshold.** According to Hong Kong stock rules, after crossing this line, any change in shareholding by an integer percentage point must be publicly disclosed again. **This gives us a window for continuous tracking**—whether it continues to add or starts reducing, we can see. Institutional signals available for Hong Kong retail investors to follow are few, so this counts as one.

**Signal Two: Major shareholders are reducing holdings—but this is the easiest to misinterpret.**

Also on the evening of July 30, another announcement came out from the A-share side, with a title that looks quite scary:**The controlling shareholder and persons acting in concert collectively reduced their A-share holdings by 6.21 million shares, lowering their shareholding ratio from 17.99% to 16.53%, a decrease of 1.46 percentage points.**

Calculated at the A-share closing price on July 30, the corresponding market value exceeds 5.3 billion yuan. Don't panic yet; we first need to know how this money operation works before discussing other things:

**First, within the 1.46%, only about 0.54% is actual reduction, while the remaining 0.92% is passive dilution.** Because the total share capital expanded after the H-share issuance, the number of shares held by existing shareholders remained unchanged, so their proportion was naturally diluted.

**Second, the time span needs to be clearly understood.** The equity change interval covered by this announcement is from May 28, 2025, to July 30, 2026, spanning fourteen months. Specifically: Zhongji Holding reduced 5.5 million shares through block trades from November 20, 2025, to January 15, 2026, and Wang Xiaodong concentratedly sold 708,600 shares through competitive bidding from August 27 to November 24, 2025.

The reason for announcing now is that the cumulative change magnitude just crossed the integer multiple disclosure threshold of 1%, triggering the disclosure obligation. **It's because the rule deadline arrived, not because they just finished selling; in other words, there's nothing wrong, don't overthink it.**

**Third, actual controller Wang Weixiu did not directly reduce his shareholdings, and control rights have not changed.**

So the correct reading of this is:**A historical retrospective announcement triggered by disclosure rules, having no causal relationship with the current stock price. Viewing it in opposition to the Capital Group news is a misinterpretation.**

**Signal Three: Institutional attitudes were actually written into the subscription multiples at issuance.**

Looking back at the issuance phase, there was a number that was overshadowed by the emotion of the first-day breakage:**Zhongji Xuchuang's international placement received 9.73 times subscription.**

The attitude of major banks is also clear.**On July 17—exactly the day this round of tech stocks experienced their first massive sell-off—Goldman Sachs significantly raised Zhongji Xuchuang's 12-month target price from 1187 yuan to 2581 yuan,** maintaining a Buy rating, while simultaneously raising net profit forecasts for 2026 to 2028 by 65%, 108%, and 119% respectively. The adjusted expected net profits are 38.4 billion, 80.1 billion, and 109.6 billion yuan. It predicts the global optical module market size will be 50.9 billion USD in 2026, rising to 72.6 billion USD in 2027, with 1.6T optical modules expected to ship 25.5 million units in 2026.

On the same day,**Morgan Stanley raised earnings forecasts based on industry demand exceeding expectations,** predicting net profits of 33.2 billion, 70 billion, and 92.1 billion yuan for 2026 to 2028, and calculating that the AI optical module market size will expand from 18 billion USD in 2025 to 102 billion USD in 2028, growing more than fivefold over four years.

**This shift by Morgan Stanley deserves a separate mention.** In September 2025, it had downgraded ratings for Xin Yisheng and Tianfu Communication to Sell, citing that "fundamental positive factors have already been fully reflected in the stock price."**The fact that the most cautious institution turned to broadly bullish itself is a microcosm of changing institutional consensus.**

In terms of overall consensus, as of July 17, the consistent expected target price for A-shares across 49 institutions was 1245.60 yuan.

**Of course, these are all sell-side views, treat them as entertainment, because there are too many examples of them saying one thing but doing another. I use these examples here just to tell everyone that at least in the medium to long term, the market is relatively optimistic about this industry, including Zhongji.**

**Next, watch three windows.**

**Window one, subsequent disclosures by Capital Group.** If it continues to add, it indicates it believes this position hasn't finished moving; if it starts reducing, it indicates it believes the repair is complete.

**Window two, the end of the Greenshoe stabilization period on August 26.** During this month, the sponsor has the motivation to support the market, stepping in to buy if it falls sharply. **After the 26th, this floor support will be removed, and prices will be handed back entirely to the market.**

**Window three, the race between valuation and fundamentals.** The safety cushion provided by the discount has been used up; now upward movement relies on earnings realization, not price spread repair.

**Xiao Xin's Conclusion**

Researching recent new stocks requires a completely different skill set from IPO subscription.

**And everyone shouldn't be scared by the title; the skill of interpreting news is sometimes more valuable than the news itself.**

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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**