Potential Impact of Topstar (300607) H-Share Listing on A-Share Valuation and Competitiveness

The following analysis is based on existing public information and tool data, and is premised on the “if H-share listing is realized” scenario. It clarifies the potential impact mechanism of this scenario on Topstar’s A-share valuation and the possible enhancement of competitiveness through a dual-platform structure. Currently, no official announcement has been retrieved to confirm that Topstar has initiated or disclosed details of its H-share listing, so all conclusions are conditional and uncertain.

• Stock Price Performance (Within 2025): Range increase of +32.95%, closing price of 33.77, annual high of 43.50 and low of 21.60, with high volatility (daily σ ≈3.93%) [0].
• Valuation: TTM caliber is negative, so P/E is distorted; P/B ≈5.56x [0].
• Profit Quality and Financial Health: In the latest quarter (2025-10-27), EPS was 0.04 and revenue was 601.6 million yuan [0]; the TTM net profit margin in the past 12 months was -8.82% and ROE was -7.27%, indicating phased pressure [0]. Financial analysis shows an “aggressive” accounting preference, debt risk is classified as “low”, and the return to positive cash flow still needs to be observed [0].
• Capital Structure: The tradable share capital and market capitalization are potentially greatly affected by the differences between the two markets (assuming H-share listing). Subsequent attention should be paid to the dilution of total share capital and the structure of tradable shares in both markets [0].

1. Reconstruction of Investor Structure and Funding Sources

• Attracting More International/Long-Term Capital: If H-share listing is realized, the company can obtain Hong Kong dollar/US dollar financing channels and attract a wider range of overseas investors (QFII/RQFII, southbound Stock Connect, global funds), which may improve the shareholding structure and increase the proportion of institutional and long-term holdings [1].
• Valuation Repair by Southbound Capital and Convergence of AH Premium: Similar cases show that after high-quality A-shares are listed in Hong Kong, if their fundamentals and growth story are recognized, the AH premium can significantly converge or even reverse (e.g., CATL’s H-shares once had a premium over A-shares, and a similar phenomenon occurred with Hengrui Medicine’s H-shares) [1][2].
• However, it should be noted that the final trend of AH premium/discount depends on the comprehensive game of “issuance pricing, tradable share volume, liquidity in both markets, and investor structure”, and cannot be simply extrapolated.

2. Liquidity and Trading Activity

• Convenience of Refinancing in Hong Kong Stock Market: The refinancing mechanisms in Hong Kong (such as accelerated bookbuildings) are usually more timely and flexible, helping the company to raise funds at the right time according to market and business rhythms, and alleviating the uncertainty of A-share private placements [1].
• If H-shares are successfully introduced, it may enhance investability and awareness through Stock Connect, improving long-term liquidity, but it may not directly increase A-share turnover in the short term; changes in trading volume in both markets and Stock Connect holdings need to be tracked.

3. Information Disclosure and Governance Premium

• The Hong Kong Stock Market has strict requirements for information disclosure, corporate governance, related-party transactions, ESG, etc. After listing, it can improve governance transparency, helping to reduce information asymmetry and risk premium [1].
• A stronger governance and compliance framework may enhance the trust of international investors, thereby improving the valuation center (especially for the automation equipment and high-end manufacturing industries, which are sensitive to governance).

4. Multiple Pricing of Valuation Anchors and Arbitrage Constraints

• Under the same share same right principle, the prices of A-shares and H-shares should converge without exchange rate, dividend tax, or liquidity friction; however, in reality, there are differences in investor structure between the two markets, transaction costs (dividend tax for H-shares via Stock Connect is about 20%), exchange rates, and market sentiment [1][2].
• If the H-share issuance price is significantly lower than that of A-shares, it may suppress A-share sentiment in the short term; conversely, if H-shares are sought after by funds, the AH premium may narrow or even reverse, helping to lift A-share valuation.
• The longer-term valuation level still depends on fundamental factors such as profit growth rate, order visibility, technological moat, and globalization progress [0].

• International Brand and Business Expansion: The Hong Kong Stock Market is one of the hubs for international investors to allocate China’s high-end manufacturing and automation assets. The dual-platform is conducive to increasing brand exposure and cross-border cooperation opportunities (especially for equipment exports/overseas factory construction, technology introduction, and overseas equity incentive scenarios) [1].
• More Flexible Financing and M&A: Hong Kong dollar/US dollar financing provides more tool options for cross-border M&A, overseas R&D, and channel construction; the Hong Kong Stock Market has a rich system of refinancing and M&A tools, which is conducive to the “global resource allocation” strategy [1].
• Risks and Premises: To achieve the above benefits, the following conditions need to be met: reasonable issuance pricing (avoiding excessive discount to dilute EPS), stable post-investment governance and continuous information disclosure, clear implementation of international strategy and capital expenditure efficiency, and effective communication with investors. If operations are below expectations or there are governance flaws, it may instead lead to a double kill of valuation.

• If H-shares are successfully issued and recognized by the market:
  • Short-term (1-3 months): Issuance pricing is the key. If the pricing is low and the tradable share volume is large, it may suppress A-share sentiment in phases; if the pricing is reasonable and sought after by southbound capital, it may drive the AH premium to narrow and boost A-share sentiment.
  • Medium-term (6-12 months): If the company continues to promote technological upgrading, order delivery, and overseas market expansion after H-share listing, and profit visibility improves, H-shares are expected to receive additional allocation from global funds, the AH premium may narrow or reverse, and A-share valuation is also expected to be revised upward.
• If execution is poor (e.g., excessive pricing deviation, information disclosure or governance incidents, fundamental recovery below expectations), the AH premium may remain high or even widen, and A-share valuation will be under pressure.
• Case reference does not equal result: Each company has different business structures, industry cycles, and capital market environments. The premium reversal paths of CATL and Hengrui Medicine do not represent an inevitable recurrence [1][2].

• Regulatory and Announcements: Whether the board of directors/shareholders’ meeting approves the H-share issuance plan, the progress of CSRC filing and submission to HKEX (if it occurs, it will transition to the “verifiable” stage; currently, it is only a hypothetical scenario).
• Issuance Elements: Proposed issuance ratio, pricing range, cornerstone investors and strategic placement structure, listing location and trading system arrangements.
• Fundamental Verification: Order and revenue growth rate, gross margin and cost control, R&D and capital expenditure efficiency, increase in overseas business proportion and optimization of customer structure.
• Market Sentiment and Capital: Changes in southbound capital inflow and holding proportion, trading activity of Stock Connect, AH premium index and performance of peer comparable AH shares.

• Investors with Higher Risk Preference: If the company announces the H-share plan and the issuance pricing is relatively reasonable, they can choose the right time to position A-shares in a clearer issuance window period, combining fundamental improvement and order data, and closely monitor changes in AH premium and southbound capital after H-share listing.
• Conservative Investors: Wait for at least 1-2 quarters of performance verification and stable governance/information disclosure after H-share listing, then evaluate the sustainability of AH price difference and profit recovery, and avoid early intervention during the period of pricing and sentiment fluctuations.
• Arbitrage and Hedging Thinking: After H-share listing, if the AH premium significantly deviates from the historical range and peer comparables, hedging strategies can be evaluated based on liquidity in both markets, dividend tax, and position constraints; currently, since the plan has not been finalized, there is no specific range reference, so avoid premature arbitrage conclusions.

• If the announcement is disclosed or progress is clear, enter in-depth research to conduct:
  • Event research and valuation review before and after listing of comparable AH companies (e.g., CATL, Midea Group, some high-end manufacturing and automation targets);
  • AH premium model construction and dividend tax/capital cost calibration;
  • Scenario analysis and sensitivity calculation of Topstar’s segment valuation, order and profit forecast;
  • Quantitative backtesting of southbound capital flow, Stock Connect holdings, and industry valuation;
  • Scenario simulation and governance clause evaluation of EPS and control rights for potential issuance plans (issuance ratio, pricing).

• Currently, no official announcement of Topstar’s H-share listing information has been retrieved. The above “if realized” analysis is conditional and uncertain; if the plan fails or key terms do not meet expectations, the relevant impacts are not applicable.
• AH premium and valuation repair are driven by multiple factors (issuance pricing, tradable share volume, capital in both markets, exchange rate and dividend tax, governance and regulatory environment, etc.), and there are large differences between individual cases.
• The company’s TTM profit and ROE are negative, and the valuation is high (P/B ≈5.56x). It is necessary to be alert to the risk of valuation correction due to fundamental recovery below expectations [0].

• Under the premise of “successful realization of A+H dual-platform”:
  • Valuation Impact: Short-term depends on pricing and sentiment, medium-term depends on fundamental fulfillment; successful H-share listing and recognition usually help the AH premium to converge or even reverse, lifting the A-share valuation center (case references: CATL, Hengrui Medicine, etc.) [1][2].
  • Competitiveness and Financing Capacity: Through international brand, overseas financing and refinancing flexibility, and enhanced governance and information disclosure, the dual-platform is expected to provide support for the company’s global expansion and technological upgrading. However, the sustainability of benefits is highly dependent on execution and governance quality, and short-term friction costs and valuation fluctuation risks are not excluded.
• At the current stage, it is recommended to treat the H-share topic with a “to be verified” framework, and closely follow subsequent announcements and fundamental improvement signals; if more refined scenario calculations and comparable sample reviews are needed, in-depth research can be launched to further build data models and event studies.

[0] Jinling API Data (including real-time quotes of Topstar 300607.SZ, company overview, financial analysis, daily line data from 2025-01-01 to 2025-12-30, etc.).
[1] CICC Research Report on “A-Share to H-Share Listing Wave” and related reports (discussing policy environment, AH premium, refinancing, investor structure, etc.). Source example: Yahoo Finance Hong Kong “Major Banks” CICC: A-Share to H-Share Listing Wave Emerges, Nearly 50 A-Shares Plan to Go to Hong Kong, Potential Liquidity Demand Up to 180 Billion Yuan, 2025.
[2] Market media reports on the evolution of AH premium of CATL and Hengrui Medicine (including cases and backgrounds of H-share premium over A-shares). Source example: Summaries of relevant financial media and brokerage research reports, 2025.