Suzhou Dongshan Precision Manufacturing ended its first day of trading in Hong Kong on Oct. 28 at HK$86.15, 0.75% below its HK$86.80 offer price, after a HK$9.88 billion (US$1.26 billion) share sale that drew thin demand from retail investors, Reuters reported. Two days later, the Shenzhen-listed circuit board maker said its third-quarter net profit had roughly quintupled.

The gap between those two numbers is the problem facing Hong Kong's listing pipeline. Chinese suppliers to the artificial intelligence build-out have driven much of the city's record-setting year, and Dongshan's earnings show the business is still growing fast. Investors, though, have grown more selective about the theme, and Dongshan priced its shares at a steep discount to its Shenzhen stock.

Dongshan Precision's Hong Kong debut: weak retail book, heavy cornerstones

The H shares, trading under stock code 2384, opened at HK$82.40 and fell as much as 6.1% before recovering to a high of HK$87.10, according to Reuters. The Hang Seng Index rose 0.23% that day.

The company's allotment results, filed with the exchange on Oct. 27, show how lopsided the book was. Hong Kong retail investors applied for just 0.52 times the 11.38 million shares initially reserved for them, with 4,484 valid applications. Dongshan moved about 5.47 million of those shares to the international tranche, which was 3.17 times subscribed by 81 placees. After the reallocation, the public offer made up only 5.19% of the deal.

Cornerstone investors carried the rest. Reuters, citing the filing, said they were allocated about half the 113.8 million shares on offer, with names including Aurora SF, JPMorgan Asset Management (Asia Pacific) and Alibaba Investment. The South China Morning Post reported that quantitative trading firms including Jane Street were also among them. Cornerstone shares are locked up for six months.

The offer price sat about 7.5% below the HK$93.80 maximum, and Dongshan did not use its option to enlarge the deal. Net proceeds came to about HK$9.72 billion after HK$159.44 million in estimated listing expenses, the filing said. Underwriters over-allocated 17.07 million shares, and UBS, as stabilizing manager, may support the price until Nov. 22.

Estimates of the discount to Dongshan's Shenzhen stock vary by reference date. TechNode put it at about 35% against the Oct. 23 A-share close, while the SCMP calculated 27% against the Oct. 27 close. Either way, buyers of the H shares paid far less than mainland holders for the same company. The Shenzhen stock has fallen more than 63% from its July peak, the SCMP said.

Third-quarter profit jumps 401% on AI demand

On Oct. 30, Dongshan published its first quarterly report since the Hong Kong listing. Operating revenue for the three months to Sept. 30 rose 73.8% from a year earlier to 17.58 billion yuan, and net profit attributable to shareholders climbed 401% to 2.33 billion yuan. Basic earnings per share were 1.27 yuan.

For the first nine months, revenue rose 67.6% to 45.38 billion yuan and attributable profit increased 332% to 5.29 billion yuan. Operating cash flow over the period rose 19.3% to 3.52 billion yuan, a far slower pace than profit. The report said accounts payable rose 31.7% since the start of the year, which it put down to expansion of the optical transceiver and AI circuit board businesses and new production capacity.

Much of that growth was bought. Dongshan took control of optical module maker Source Photonics in September 2025, and TechNode reported that optical transceivers made up 19.2% of first-half 2026 revenue at a 39.2% gross margin. The company plans to spend most of the Hong Kong proceeds on high-speed optical chips, optical modules and high-end circuit boards, Reuters said, citing the prospectus.

A cooler market for AI listings in Hong Kong

The deal was about half the US$3 billion Dongshan first sought, Bloomberg reported, and was the 10th Hong Kong listing this year to raise more than US$1 billion. That run has put Hong Kong's 2021 fundraising record within reach, by Bloomberg's count; the city's IPOs raised a record HK$388 billion in the first nine months. But other circuit board makers that listed this year, including Victory Giant Technology and Guangzhou Guanghe Technology, have fallen about 70% from their peaks and trade below their offer prices, the SCMP reported.

Dickie Wong, executive director of research at uSMART Securities, told Reuters that the city's AI supply-chain theme had "already passed its most enthusiastic phase." Stevan Tam of Fulbright Financial told the SCMP that sentiment toward Chinese AI stocks had faded since July. Robot maker Changzhou Microintelligence and Jiangsu Slender West Lake Culture and Tourism delayed planned Hong Kong offerings before Dongshan priced, Reuters said.

Demand elsewhere in Asia held up better on the same day. Jio Platforms jumped in its Mumbai debut after India's largest IPO.

The next test for Dongshan's H shares is the end of the stabilization window on Nov. 22. Any decision by the underwriters on the over-allotment option will be announced on the exchange's website.