HK Stock Connect Watch | CREALIGHTS (01191.HK) revises IPO proceeds use to boost raw material purchases; southbound holdings ratio rises to 4.6%

NewTimeSpace News: Beijing Hygon Xinzheng Technology Co., Ltd. (01191.HK) announced on October 13 a proposal to change the use of proceeds from its global offering, adding a raw material procurement sub-item under the capacity expansion use of proceeds and reallocating HKD232 million from the original capacity expansion funds and HKD210 million from the original R&D talent funds to that sub-item, with a further HKD138 million of the original R&D talent funds reallocated to general working capital.

The company stated that the adjustment only reallocates funds within the categories of use already disclosed in the prospectus and does not constitute any new use of proceeds that was not previously disclosed, and that the reallocated proceeds are expected to be fully utilised in the second half of 2027. The company said the board considers that there is no material change to the substance of the business set out in the prospectus, and that the proposed change is not expected to have any direct impact on assets, liabilities or capital structure. The company also disclosed on the same day that board secretary Hu Yong resigned from that position due to work arrangements and will continue to serve as an executive director and deputy general manager of operations, while Pan Hang was appointed joint company secretary and board secretary effective October 14.

In the market, the shares have fluctuated considerably since listing. Four of the five trading sessions from October 9 to 15 closed lower. On October 9, the shares closed at HKD108.20, down 4.33%, on turnover of HKD192 million and a turnover ratio of 1.99%. On October 12, they closed at HKD101.70, down 6.01%, on turnover of HKD70.9 million. On October 13, the shares briefly rebounded, closing up 5.31% at HKD107.10 on turnover of HKD207 million. They fell for two consecutive sessions on October 14 and 15, dropping 8.03% and 8.83% to close at HKD98.50 and HKD89.80 respectively, with turnover of HKD133 million and a turnover ratio of 1.62% on the 15th, and an intraday range of 8.68% that day. The shares recovered somewhat intraday on October 16, trading at HKD90.35 as of 11:11 a.m., up 0.61%, on turnover of about HKD62.58 million. The Hang Seng Tech Index fell 2.72% on the 15th, with optical communications and semiconductor sectors leading the declines, and the company's decline that day was in line with its sector. Compared with the IPO price of HKD114 at listing on June 29, the closing price on the 15th was some21% lower.

On Stock Connect, the company announced on August 21, 2026 that it had been included as a constituent of the Hang Seng Composite Index, an adjustment effective September 7. Southbound holdings data was first recorded on September 9, with 518,200 shares held, representing 0.56% of total share capital. According to Choice data, the southbound holding ratio rose day by day thereafter, reaching 4.21755 million shares and 4.6% as of October 15. Over the past five trading sessions, holdings peaked at 4.30885 million shares, or 4.7%, on October 12, before falling to 4.0642 million shares, or 4.43%, on October 14.

On fundamentals, the company released interim results for the six months ended June 30, 2026 on August 28. Revenue for the period was RMB798.5 million, up 14.4% year on year, driven mainly by continued investment in AI computing infrastructure and higher transmission speeds lifting sales volume of high-speed optical modules, with the increase in shipments of higher-value 800G optical modules making a significant contribution. Broken down by transmission speed, 400G products contributed RMB422.9 million, or 53.0% of revenue; 800G products contributed RMB239.1 million, with their share rising from 12.5% a year earlier to 29.9%; low-speed optical modules and other products contributed RMB136.5 million, or 17.1%; and AOC revenue fell 37.0% from RMB182.9 million to RMB115.1 million.

Gross profit rose from RMB42.7 million to RMB44.5 million, while gross margin edged down from 6.1% to 5.6%. The loss for the period widened to RMB118.3 million, an increase of approximately 2.39 times year on year, mainly due to higher operating expenses. Adjusted net loss (a non-IFRS measure) was approximately RMB75.7 million, compared with RMB29.8 million in the same period a year earlier. R&D expenses rose 58.4% from RMB42.8 million to RMB67.8 million, lifting R&D as a percentage of revenue from 6.1% to 8.5%. By region, revenue from mainland China was RMB699.9 million, or 87.6% of total, while revenue from Malaysia rose from RMB10.3 million to RMB30.9 million and revenue from the United States was RMB48.4 million. Net cash used in operating activities was RMB73.4 million, compared with a net outflow of RMB18.0 million in the same period a year earlier. The board resolved not to declare an interim dividend.

On institutional research, Guosheng Securities, in its report titled "Silicon Photonics as the foundation, positioning in AI optical interconnect", noted that as the company's high-speed optical modules ramp up and it strategically positions in the NPO/CPO track, combined with capacity ramp-up releasing scale effects and a rising share of silicon photonics products, revenue growth and gross margin improvement at Hygon Xinzheng may form a resonance.