A new "stock king" is born in the A-share market. How to reasonably value ChangXin Memory Technologies (CXMT)?

Original Author: Long Yue

Original Source: Wall Street News

ChangXin Memory Technologies (CXMT) (688825) will be listed today, becoming the largest IPO on the STAR Market. The IPO issue price is 8.66 yuan, with a total share capital of 66.881 billion shares (before exercising the over-allotment option) and a total market capitalization of 579.188 billion yuan at issuance. However, the market clearly does not intend to pause at this price.

In a research report, Northeastern Securities analyst Li Jiu valued CXMT from three independent perspectives, with conclusions converging in the range of 3.2 to 5.7 trillion RMB. On the same day, Nomura initiated coverage with a Buy rating and a target price of 116 yuan, implying a potential upside of 1239%, corresponding to a market cap of approximately 7.76 trillion RMB — 1.4 times the upper limit of Northeastern Securities' estimate. The core divergence between the two institutions lies in their judgment of CXMT's long-term market share ceiling — Northeastern Securities' base case assumes 17%, while Nomura bets on a larger share and higher growth premium.

The above valuations may not be exaggerated. CXMT is a unique entity in the A-share market: a pure-play DRAM IDM leader with full design and manufacturing capabilities, currently in an explosive growth phase driven by a "cycle reversal + market share increase". The company's products cover DDR4/5 and LPDDR4X/5/5X and have entered the supply chains of Alibaba, Tencent, ByteDance, and major smartphone makers. According to Omdia data, in Q4 2025, the company held a global market share of 7.67%, ranking first in China and fourth globally. Benefiting from memory price increases and volume growth of high-end products, the company's earnings elasticity is accelerating.

The DRAM supply-demand gap persists, and CXMT enjoys dual tailwinds of "rising volume and price + domestic substitution." The real question is not whether it is valuable, but which yardstick to use for measurement.

Perspective 1: Relative Valuation by Market Share — Target Market Cap ~3.49 Trillion RMB

Logic: Since DRAM is a globally unified market, the market caps of overseas listed memory companies already include the market's pricing for "every percentage point of share." Using the market caps of comparable US-listed companies, we reverse-engineer the "market cap corresponding to each 1% of long-term global share," then multiply by CXMT's long-term share.

Method: Micron and SanDisk have exactly equal NAND shares (13% each). Therefore, Micron's market cap (a combined DRAM and NAND company) minus SanDisk's market cap (a pure NAND company) equals Micron's DRAM business market cap — $1,022 billion - $230.8 billion = $791.2 billion. Dividing this by Micron's 19.85% long-term DRAM share yields approximately $39.86 billion per 1% of long-term DRAM share.

Conclusion: As a pure DRAM play, with a long-term share of 17% (currently ~8%), CXMT's corresponding market cap is approximately $677.676 billion, equivalent to roughly 4.58 trillion RMB (at an exchange rate of 6.77). After deducting a ~24% minority interest, the parent company market cap is approximately 3.49 trillion RMB.

Back-testing Verification: The calculated market cap for SK Hynix was 9.44% higher than actual, and for Kioxia only 0.66% higher, indicating the results are largely consistent with actual market caps.

Perspective 2: Profit Decomposition & PE Valuation — Target Market Cap 2.85 Trillion to 4.27 Trillion RMB

The second method is more fundamental: it does not rely on external anchors but directly forecasts CXMT's own profits. The cost structure of memory fabs is highly standardized, with fixed costs primarily consisting of depreciation determined by capital expenditure scale, and variable costs varying linearly with shipment volume. Since the prospectus does not disclose actual wafer capacity data, the calculation uses gross fixed assets as a proxy for capacity, multiplies by utilization rate and sell-through rate to derive sales volume, and then combines with ASP to obtain revenue.

Logic: Disaggregate revenue (capacity × utilization rate × sell-through rate × ASP) and costs (fixed costs depreciation + variable costs), forecast net profit, and then apply a PE multiple.

Key Forecasts:

• 2027 Revenue: 471.6 billion RMB, Gross Margin: 86.96%, Net Profit: 374.7 billion RMB (consolidated)
• After deducting minority interests (assuming a constant 24% share), net profit attributable to parent: approximately 284.8 billion RMB

Valuation: Northeastern Securities notes that Micron and SK Hynix trade at PEs of 7.51x and 7.94x for 2027, respectively. However, CXMT is in a phase of rapid market share growth (long-term share expected to reach ~30%), warranting a growth premium. Applying a 10-15x PE multiple to the net profit attributable to parent yields a target market cap of approximately 2.85 trillion to 4.27 trillion RMB.

Perspective 3: Relative Valuation by Unit Capacity — Target Market Cap 3.22 Trillion to 3.99 Trillion RMB

Logic: Divide the market cap of overseas memory fabs by their monthly capacity to derive the "market cap per 10k wafers/month," then multiply by CXMT's capacity plan.

Reference Group: The "market cap per 10k wafers/month" for the top three manufacturers ranges from $15.8 billion to $19.8 billion — SK Hynix $16.045 billion, Micron $19.780 billion, Samsung $15.891 billion.

Conclusion: With CXMT's capacity at 450k wafers/month in 2027, corresponding market caps are:

• Bullish Scenario (average of top three at $17.2 billion/10k wafers): 5.2518 trillion RMB
• Neutral Scenario (including average of Taiwanese fabs at $13.9 billion/10k wafers): 4.2327 trillion RMB

After deducting minority interests, the corresponding market cap is approximately 3.22 trillion to 3.99 trillion RMB.

Summary of Three Methods: Convergence at 3.2 Trillion to 5.7 Trillion RMB

Northeastern Securities points out that CXMT's minority interest ratio was as high as 73.76% in 2025, far exceeding Samsung, SK Hynix, and Micron (all less than 1%), so the valuation must exclude this effect.

Assuming the minority interest ratio remains at 24% for 2026 and 2027, the results from the three methods are as follows: excluding minority interest effects, the reasonable valuation range is 3.2 to 5.7 trillion RMB.

The three perspectives use different data and different logical chains, but the final parent-company-口径 (attributable) valuation intervals all converge around 3 to 4.3 trillion RMB. This convergence itself is a signal: under current market share and capacity assumptions, a valuation at this magnitude has strong self-consistency.

Nomura: Target Price 116 Yuan, Implied Upside 1239%

On July 27, Nomura also initiated coverage on CXMT, offering a more aggressive assessment.

The investment bank started coverage with a "Buy" rating and a target price of 116 RMB, corresponding to approximately 20x PE — fully double Micron's current valuation (~10x) and more than double SK Hynix's current valuation.

Based on the IPO issue price of 8.66 yuan, the target price of 116 yuan implies an implied upside of 1239.5%, corresponding to a market cap of approximately 7.76 trillion RMB.

This figure far exceeds Northeastern Securities' upper valuation limit of 5.7 trillion RMB. The approximately 2 trillion RMB gap essentially represents different bets on two core variables: where CXMT's market share ceiling lies, and what growth premium the market should assign to the company.

2026 is Just the Starting Point! Domestic Substitution Combined with AI Demand, Nomura Grants CXMT a Dual Growth Premium

Nomura's underlying logic for giving a 20x PE premium is built on three judgments.

First, structural tightening of supply will last for several years. The bank's core thesis is: "Global memory supply is unlikely to be loose in the coming years." The capital expenditures of Samsung, SK Hynix, and Micron have shifted heavily towards HBM and advanced processes, structurally suppressing new supply of general-purpose DRAM. This means the general-purpose DRAM market where CXMT operates will remain in a supply-shortage state for a considerable period, rather than the traditional memory cycle of "two years up, two years down."

Second, CXMT's market share growth logic is "accelerating," not "linear." The bank believes that as CXMT's capacity continues to expand and its process technology migrates from the 4th to the 5th generation, its global share in the general-purpose DRAM market will increase faster than market expectations. The long-term potential implied by Nomura's model for CXMT's current ~8% share is clearly far higher than Northeastern Securities' assumed 17% upper limit. Reverse-engineering Nomura's implied long-term market share assumption from the 7.76 trillion RMB target market cap suggests a share range of 25% to 30%, or even higher.

Third, domestic substitution combined with AI demand creates a dual growth premium. The bank believes CXMT is not just a memory cycle play but also a "domestic substitution" thematic stock. The willingness of Chinese cloud and smartphone companies to purchase domestic DRAM is continually increasing, providing CXMT with additional demand independent of the global cycle. Simultaneously, AI server demand for DRAM is growing exponentially, with server DRAM content per unit nearly 80 times that of a smartphone. This shift in demand structure will structurally elevate the ASP floor. Combining these two logics, Nomura argues that CXMT should command a higher valuation premium than its overseas peers, not a discount.

In other words, Nomura does not see 2026 as a peak, but merely as a starting point.

In its specific financial forecasts, Nomura predicts CXMT's sales and net profit attributable to parent will grow by 63% and 74%, respectively. Drivers include capacity expansion from 270k wafers/month in 2025 to 450k wafers/month in 2027, increased value per wafer from process migration, and sustained DRAM average selling price increases under tightening supply. Nomura's profit forecasts are more aggressive in absolute numbers than Northeastern Securities', and its 20x PE multiple assumption further amplifies the final valuation outcome.

Supporting this more aggressive assumption are supply-demand data: global general-purpose DRAM capacity calculations show a persistent gap in 2027; DRAM contract prices in Q1 2026 surged 93% to 98% QoQ, significantly exceeding previous expectations; CXMT's gross margin in Q1 2026 reached 79.16%, with quarterly net profit attributable to parent at 24.762 billion RMB.

The height of the price upcycle is continuously revising the input assumptions of all models in real-time.

From Zero to Global Fourth, CXMT Achieved This in Seven Years

In 2019, CXMT (formerly RuiLi Integrated) launched mainland China's first self-produced 8Gb DDR4, achieving a breakthrough from zero to one in domestic DRAM.

Seven years later, the company is now the leading DRAM manufacturer in China and fourth globally. According to Omdia data, CXMT's global market share reached 7.67% in Q4 2025.

In its product line, CXMT covers the full generational range of DDR4/5 and LPDDR4X/5/5X. It stopped producing its own DDR4 in late 2024, shifting capacity entirely to higher-value products like DDR5 and LPDDR5/5X. Customers include Alibaba, Tencent, ByteDance, and major smartphone supply chains.

Capacity-wise, the company operates three 12-inch wafer fabs: two in Hefei and one in Beijing. Northeastern Securities expects capacity to expand from 270k wafers/month in 2025 to 450k wafers/month in 2027, increasing its global share from 14% to 17%.

Financial Inflection Point: Staggering Profit Elasticity Under the Price Upcycle

CXMT's financial trajectory follows the classic script for a capital-intensive memory fab — fixed costs front-loaded during the down cycle lead to losses, while profits are rapidly released during the up cycle.

Key milestones are as follows:

• 2025: Net profit attributable to parent turned from a loss of 16.34 billion RMB to a profit of 1.875 billion RMB. Consolidated gross margin rose to 40.99%, roughly on par with Samsung (39.38%).
• Q1 2026: Quarterly revenue was 50.8 billion RMB (+719% YoY), gross margin 79.16%, net profit attributable to parent 24.762 billion RMB.
• H1 2026: Management expects revenue of 110-120 billion RMB, net profit attributable to parent of 50-57 billion RMB.

The core driver of the profit explosion is price. According to TrendForce's latest survey from June 2026, general-purpose DRAM contract prices surged approximately 93%-98% QoQ in Q1 2026, far exceeding the previous double-digit forecast range.

Northeastern Securities also lists four primary risks:

1. Demand below expectations: Slower AI server build-out or sluggish consumer electronics recovery.
2. Periodic price downturns: For example, during 2022-2023, prices experienced a deep decline of up to 50% from cycle peaks.
3. Capacity and technology iteration below expectations: Delays in R&D for the 5th generation process platform could impact volume and price realization.
4. International trade friction and supply chain constraints: Geopolitical tensions could exacerbate industry chain instability.