Summary of Key Points
Moore Threads has planned to list on the Hong Kong Stock Exchange just 8 months after its initial public offering on the STAR Market. On the surface, it still has 5.6 billion yuan in raised funds, but its operating cash flow showed a net outflow of 2.1 billion yuan in the first half of the year, indicating potential long-term financial pressure. The significant reduction in reported losses was due to government subsidies and investment earnings; however, its main business has not yet become profitable. Inventory increased by 2.2 billion yuan to 3.5 billion yuan, raising questions about whether this can be converted into revenue. Planning for a Hong Kong listing at this time is like “repairing the roof on a sunny day”—taking advantage of policy support and a favorable market window to prepare financing channels in advance, to avoid missing opportunities when funds are needed in the future. However, this also comes with the risks of issuance costs and potential dilution of equity.
Detailed Analysis
1. 5.6 billion yuan in funds, yet still seeking more? Long-term funding concerns
Moore Threads raised 7.5 billion yuan on the STAR Market and has only spent 1.9 billion yuan so far, with the remaining 5.6 billion yuan held in large-denomination certificates of deposit and financial products. These funds cannot be used freely; they must be invested in research and development (R&D) and chip production according to the prospectus, with projects expected to be completed by 2028. More importantly, operating expenses are increasing: the net cash flow for the first half of the year was a loss of 2.1 billion yuan, 1 billion yuan more than the same period last year, mainly due to costs related to purchasing raw materials and inventory buildup. Although there is money on the books, long-term needs such as chip R&D, supply chain investments, and customer validation will continue to require substantial funding. The existing funds may not be sufficient to support the company until it achieves commercial success.
2. Surprising profit figures? Don’t be fooled by the numbers
The net loss attributable to the parent company in the first half of the year decreased from 270 million yuan to 11.56 million yuan, which might suggest a turnaround. However, this improvement is largely due to non-recurring gains (mainly government subsidies and investment earnings). Excluding these, the main business still incurred a loss of 150 million yuan. Additionally, investments in other equity instruments increased by 13 times, but this is “paper wealth” that cannot be converted into cash until the assets are sold. Therefore, the improvement in financial figures is not indicative of actual profitability.
3. Is the 3.5 billion yuan in inventory an opportunity or a liability? It depends on orders
Inventory increased from 1.3 billion yuan to 3.5 billion yuan, with the company claiming it was to meet growing demand. Inventory buildup is common in the chip industry due to slow delivery times in manufacturing and packaging processes. The key question is whether there are actual orders behind this increase; if so, it could indicate a surge in commercial activity. Otherwise, the inventory may become a liability if it cannot be sold, potentially resulting in losses (the company already recorded an impairment of 39 million yuan). This is a critical point for investors: whether the additional inventory represents a valuable asset or a burden.
4. Why now for a Hong Kong listing? Seizing policy and market opportunities
Two factors are crucial: first, policy support—both the China Securities Regulatory Commission and the Hong Kong Stock Exchange have recently introduced policies to encourage domestic companies to list in Hong Kong; second, the current market situation—there is still interest in semiconductors and AI sectors. However, this window may close at any time due to market fluctuations or capital withdrawal. Analysts suggest preparing now to take advantage of available funding, as it might become difficult to raise funds later on. More than a dozen semiconductor companies are considering listing in Hong Kong, so late action could lead to competition for funds and missed valuation opportunities.
5. Hong Kong listing comes with costs: both financial and equity-related risks
A Hong Kong listing is not without expenses. The company will need to pay for sponsorship and auditing fees, among others. It has already spent 420 million yuan on the STAR Market and will likely spend more for the Hong Kong listing. Additionally, issuing new shares will dilute the existing shareholders’ equity (for example, if 10% of the shares are issued, their stake will decrease by 10%). Moreover, Hong Kong stock prices are typically 20%-30% lower than A-share prices, which could result in a lower selling price. Although the company is only “planning” the listing, its articles of association authorize the board to issue up to 50% of the shares over the next three years, meaning there is significant potential for equity dilution. Existing shareholders need to monitor the final issuance ratio and pricing carefully to avoid losses.
Conclusion
Moore Threads’ plans for a Hong Kong listing aim to use current advantages to ensure future financial stability by preparing financing channels while policies and markets are favorable. Whether this will be successful depends on whether the Hong Kong market values the scarcity of domestic GPUs and whether the company can convert its inventory into actual revenue and make its main business profitable. While financing can extend the company’s development timeline, its success ultimately relies on orders and cash flow.