Southbound capital targets Physical AI: Why Haiqing Zhiyuan (01392.HK) is the top pick

On September 4, the Stock Connect program entered a new periodic adjustment window. A batch of high-potential stocks will officially come into view of mainland investors and begin trading on September 7. Among them, Haiqing Zhiyuan (01392.HK), dubbed the "first Physical AI stock" after its June listing, has recently become the primary focus of southbound capital.

As one of the few multispectral Physical AI companies in the Hong Kong market to have successfully achieved commercial implementation, the company just released its impressive first semi-annual results since listing. Coupled with the consecutive acquisition of multiple official industry qualifications, it stands at the intersection of improved liquidity and industrial growth.

1. Stock Connect Adjustment Window: Limited Event-Driven Upside; Operational Fundamentals Remain the Core Anchor

After the close on September 4, the Shanghai Stock Exchange issued a notice stating that, in accordance with the relevant provisions of the Implementation Measures for Shanghai-Hong Kong Stock Connect Business, Haiqing Zhiyuan (01392.HK) has been formally added to the list of eligible securities for Stock Connect. This adjustment will take effect from Monday, September 7. This means mainland investors can now directly buy and sell shares through the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs, effectively unlocking access for southbound capital to Haiqing Zhiyuan.

Over years of development, southbound capital has become a significant pricing force in the Hong Kong stock market that cannot be ignored. The anticipation of inclusion in the Stock Connect has also spurred speculative trading focused solely on eligibility adjustments—some companies merely hover near the market capitalization threshold with little substantive business output, leading to short-term price volatility but lacking long-term support. However, Haiqing Zhiyuan is not such a candidate: from 2023 to 2025, its revenue surged from RMB 117 million to RMB 669 million, representing a compound annual growth rate (CAGR) of 139%. In the first half of 2026, it continued to grow year-on-year by 84.5% to RMB 410 million, ranking first in revenue within China's multispectral AI industry. For Haiqing Zhiyuan, inclusion in the Hong Kong Stock Connect serves as a "catalyst" for the discovery of its long-term value, rather than a tool for speculation. Companies with true industry leadership and technological barriers are most worthy of long-term tracking by southbound capital.

If the inclusion proceeds smoothly, it will bring about two substantial changes: On one hand, mainland public and private funds, as part of southbound capital, will be able to participate directly in trading, broadening the investor base and bringing incremental liquidity. On the other hand, A-share institutions specializing in industrial intelligence will include the company in their research coverage, prompting the market to re-evaluate the commercial value of multispectral physical AI.

II. Southbound Capital's AI Investment Trend: Moving Beyond Conceptual Hype to Focus on Commercialization Capabilities

Since 2026, capital preferences in the AI sector of the Hong Kong stock market have shifted significantly. In earlier years, the market chased conceptual narratives around general-purpose large language models. Today, southbound capital places greater emphasis on the deep integration of AI technology with core business operations, prioritizing companies that have already generated commercial revenue and can demonstrate implementation capabilities. Stocks characterized by "heavy on concepts, light on revenue" are gradually being marginalized by capital flows.

AI companies recently included in the Hong Kong Stock Connect, such as Zhipu AI and MiniMax, have seen significant net inflows, indicating that capital is willing to pay a premium for AI assets that have achieved industrial implementation. A review of southbound capital holdings reveals that favored AI companies share a common trait: their technologies have moved out of the laboratory, been embedded into real industrial processes, and formed accountable revenue streams.

Haiqing Zhiyuan focuses on multispectral physical AI. Unlike general-purpose large models used for dialogue or content generation, it specializes in risk perception and early warning in the industrial physical world. The company's business performance aligns precisely with the current stock selection preferences of southbound capital for AI assets: it does not rely on conceptual storytelling but secures real industrial orders through a combination of hardware and large model services.

III. The Scarce Value of Haiqing Zhiyuan: Financial Reports and Industrial Validation Confirm Hard Strength

The scarcity value of Haiqing Zhiyuan does not stem merely from the "physical AI" label, but from the simultaneous presence of multiple key elements: rapid growth in large model revenue, a full-stack software and hardware technological foundation, endorsement through official industrial qualifications, and the batch implementation of benchmark projects.

First, the semi-annual report validates the successful commercialization of its large models.

In the first half of 2026, the company achieved total revenue of RMB 410 million, a year-on-year increase of 84.5%. After excluding one-time expenses related to the IPO, the adjusted net profit was RMB 27.6 million, up 21.9% year-on-year, indicating steady growth in core business profitability.

A pivotal shift has occurred in the business structure: revenue from multispectral AI large model services reached RMB 320 million, surging 382.5% year-on-year and accounting for 78.8% of total revenue, officially becoming the primary growth engine. The company has moved away from the traditional model of solely selling hardware modules, transitioning toward high-value-added risk assessment services. In the first half of the year, it secured two major benchmark IDC orders from a Shanghai state-owned enterprise and a Shenzhen-listed company.

The short-term decline in the hardware segment reflects a strategic choice to scale back low-margin projects and redirect resources toward large model service solutions. With a cash reserve of RMB 596 million, the company is well-equipped to fund R&D iterations and market expansion. Although the overall gross margin faced short-term pressure due to a higher proportion of hardware in large orders, there is room for margin recovery as the share of high-margin large model services continues to rise.

Second, continuous technological iteration is driving progress, with edge-side solutions opening up new growth potential.

R&D expenditure during the reporting period amounted to RMB 35.11 million, a significant year-on-year increase of 125.3%. The self-developed Zhiyuan Origin large model continues to iterate, having completed migration to the NVIDIA Jetson hardware platform, with lightweight edge-side solutions entering real-world validation stages. Once these edge-side solutions mature, they will lower the computing power threshold for customers, expanding the client base from large central state-owned enterprises to a broad range of small and medium-sized industrial clients.

Third, cross-sector integration into embodied intelligence, coupled with accelerated internationalization.

Another key highlight for Haiqing Zhiyuan this year is its collaborative partnerships with companies in the embodied intelligence sector.

In June this year, Haiqing Zhiyuan signed a cooperation agreement with Hangzhou Deep Robotics Technology Co., Ltd. Leveraging their complementary strengths in hardware carriers and multispectral AI perception, the two parties aim to deeply integrate multispectral AI modules with embodied intelligent agents, exploring collaborations on "Multispectral AI + Embodied Intelligence" solutions in the field of power grid inspection.

In simpler terms, Haiqing Zhiyuan's multispectral AI modules can be installed on robot dogs, serving as their "super eyes." Currently, the more prevalent technology in robotic power inspection is "visible light + infrared," which cannot detect early fire signals such as partial discharges and electric arcs in industrial settings. Haiqing Zhiyuan's multispectral AI technology precisely addresses this gap. $HQVT (01392.HK)$

Furthermore, in July this year, Haiqing Zhiyuan established a strategic partnership with Singapore-based LINKWISE, focusing on physical space security in sectors such as data centers, industrial manufacturing, and new energy. By leveraging Singapore as a hub to reach surrounding markets, the company is accelerating its international expansion.

Its cross-industry expansion into embodied AI and the acceleration of its overseas business operations sufficiently demonstrate Haiqing Zhiyuan's vast potential for future growth.

Fourth, a series of industry breakthroughs have followed in quick succession, garnering recognition from multiple authoritative bodies.

Recently, the Shenzhen Municipal Bureau of Industry and Information Technology (MIIT) published the proposed list of new additions to its 2026 model service provider registry, with Haiqing Zhiyuan's "Zhiyuan Origin Large Model" selected for inclusion. As the primary authority coordinating AI industry development in Shenzhen, the Bureau's registry serves as a strong market bellwether. This inclusion positions Haiqing Zhiyuan to leverage Shenzhen's AI support policies to further expand its market reach among local industrial clients. The "Zhiyuan Origin Large Model" has previously completed the filing for generative AI with the Cyberspace Administration of China, meeting the mandatory compliance requirements for registry inclusion. Local enterprises in Shenzhen purchasing corresponding AI services can apply for model vouchers to subsidize procurement costs, which is expected to help the company expand its client base in the local industrial and data center sectors.

Furthermore, LeadLeo Research Institute recently released the "2026 China Physical AI Vendor Panorama Report," in which Haiqing Zhiyuan was listed among the "Top 10 Physical AI Industry Application Practices," alongside Alibaba Cloud, BYD, SenseTime, and Unitree Robotics. The report specifically highlighted the company as a representative vendor in the physical perception layer, noting that multispectral AI is a key entry point for AI-based analysis of physical information. As physical AI moves toward practical implementation, the value of the perception layer is only just beginning to be priced by the market. Coupled with the previous inclusion of the "Zhiyuan Origin Large Model" in Guangdong Province's first batch of industry-specific large AI models, this dual endorsement at both provincial and municipal levels validates the practical value of its technical solutions.

Conclusion

Overall, the inclusion in the Stock Connect program represents more of an opportunity for Haiqing Zhiyuan's value to be recognized. The improved liquidity brought by southbound capital can increase market attention on the company, helping more investors understand the commercial potential of physical AI.

However, what truly determines the company's long-term valuation ceiling is not the label of being included in the Stock Connect, but rather the high-speed growth of its large models verified in the semi-annual report, the progress in deploying edge-side technical solutions, and the continuous release of orders in new scenarios such as power and energy storage.

For southbound capital seeking hard-tech AI entities, Haiqing Zhiyuan offers a differentiated choice: it is neither a conceptual AI company spinning stories nor a traditional hardware manufacturer, but one of the few multispectral physical AI service providers on the Hong Kong stock exchange that has successfully established a closed-loop integration of software and hardware.

As the window for Stock Connect inclusion approaches, combined with the continued implementation of industrial policies and qualifications, Haiqing Zhiyuan is expected to enter the watchlists of more institutions, becoming a tracked target in the Hong Kong hard-tech sector that combines execution capability with growth potential.

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