Changxin Creation Emerges as the New A-Share King, How to Value It?

Original Article Title: "How to Value Changxin?"

Original Article Author: Long Yue, Wall Street News

Changxin Technology (688825) is scheduled to be listed today, becoming the largest IPO on the Sci-Tech Innovation Board. The IPO price is 8.66 yuan, with a total post-issue share capital of 66.881 billion shares (before the exercise of the over-allotment option), and a post-issue total market value of 579.188 billion yuan. However, the market clearly does not intend to stay at this price.

North-East Securities analyst Li Jiu, in a research report, valued Changxin from three mutually exclusive perspectives, with the conclusion converging in the range of 3.2 to 5.7 trillion yuan. On the same day, Nomura Securities initiated coverage with a Buy rating and a target price of 116 yuan, implying a 1239% increase, corresponding to a market value of approximately 7.76 trillion—1.4 times the upper limit of North-East Securities. The core difference between the two institutions lies in their judgment of Changxin's future share ceiling—North-East Securities' base assumption is 17%, while Nomura is betting on larger share space and a higher growth premium.

The above valuation may not be exaggerated. Changxin is a unique presence in the A-share market to date: a pure DRAM IDM leader, holding the full chain design and manufacturing capabilities, and is currently in a period of performance explosion due to "cyclical reversal + share increase." The company's products cover DDR4/5 and LPDDR4X/5/5X, with products already in use by Alibaba, Tencent, ByteDance, and mainstream mobile supply chains. According to Omdia data, by the fourth quarter of 2025, the company's global market share will be 7.67%, ranking first in China and fourth globally. Benefiting from the rise in storage prices and the volume of high-end products, the company's performance elasticity is accelerating.

The DRAM supply-demand gap is continuous, and Changxin enjoys the dual dividends of "simultaneous increase in quantity and price + domestic substitution." The true problem lies not in whether it is valuable, but in which yardstick to use to measure it.

Perspective One: Market Share Relative Valuation—Target Market Value of Approximately 3.49 Trillion Yuan

Logic: Since DRAM is a globally unified market, the market value of overseas listed storage manufacturers already includes the market's pricing for "each percentage point of market share." By using the market value of comparable U.S. companies, one can deduce "how much market value each 1% future global share corresponds to," and then multiply it by Changxin's future share.

Operation: Micron and SanDisk's NAND shares happen to be equal (both 13%), so Micron's (DRAM and NAND target company) market value minus SanDisk's (pure NAND target) market value equals the market value corresponding to Micron's DRAM business—$102.20 billion - $23.08 billion = $79.12 billion. Dividing this by Micron's 19.85% future DRAM share, we get that each 1% future DRAM share is worth approximately $398.6 billion.

Conclusion: Changxin, as a pure DRAM target, has a forward market share of 17% (currently around 8%), corresponding to a market value of approximately $6776.76 billion, equivalent to about RMB 45.8 trillion (calculated at an exchange rate of 6.77). After excluding the minority shareholder profit and loss ratio of about 24%, the attributable net value is around $3.49 trillion.

Backtesting Validation: Micron's calculated market value is overestimated by 9.44%, while Kioxia is only overestimated by 0.66%, showing results that are broadly in line with the actual market values.

View Two: Earnings Split PE Valuation - Target Market Value of $2.85 trillion to $4.27 trillion

The second method is more fundamental: without relying on external anchors, it directly predicts Changxin's own profit. The cost structure of a storage factory is highly standardized, with fixed costs mainly in depreciation determined by the scale of capital expenditures; variable costs vary linearly with shipment volume. As the prospectus did not disclose actual wafer capacity data, the calculation takes the original value of fixed assets as proxy capacity, multiplied by the utilization rate and production-sales rate to estimate sales volume, combined with ASP to obtain revenue.

Logic: Deconstruct revenue (capacity x utilization rate x production-sales rate x ASP) and costs (fixed depreciation + variable costs), predict net profit, and apply a PE multiple.

Key Predictions:

· Revenue in 2027 is 4716 billion RMB, gross margin is 86.96%, and net profit is 3747 billion RMB (overall basis)

· After excluding minority shareholder profit and loss (assuming the ratio remains 24%), attributable net profit is around 2848 billion RMB

Valuation: Northeast Securities believes that Micron and SK Hynix correspond to PEs of 7.51 times and 7.94 times in 2027, but Changxin is in a phase of rapid market share increase (the forward market share is expected to reach around 30%), giving it a growth premium. Based on a PE of 10-15 times, after excluding minority shareholder profit and loss contributions, the corresponding market value based on attributable net profit is approximately $2.85 trillion to $4.27 trillion.

View Three: Unit Capacity Relative Valuation - Target Market Value of $3.22 trillion to $3.99 trillion

Logic: Divide the overseas memory fab market cap by monthly capacity to obtain the "market cap per 10K wafers per month," then multiply by Yangtze's planned capacity.

Reference: The market cap per 10K wafers per month for the three major fabs is concentrated in the range of $158-198 billion — Micron $160.45 billion, Intel $197.80 billion, Samsung $158.91 billion.

Conclusion: By 2027, Yangtze's capacity of 450K wafers per month corresponds to a market cap:

· Optimistic Scenario (average of the three major fabs $172 billion per 10K wafers): $52.518 trillion

· Neutral Scenario (including Taiwan-based fabs average $139 billion per 10K wafers): $42.327 trillion

After excluding minority interest gains and losses, it corresponds to approximately $32.2 trillion to $39.9 trillion.

Summary of Three Methods: Converging at $32 trillion to $57 trillion

Northeast Securities pointed out that by 2025, Yangtze's minority interest gains and losses ratio reached as high as 73.76%, far higher than Samsung, Micron, Intel (all less than 1%), and the valuation must exclude the impact of this part.

Assuming that the minority interest gains and losses ratio remains unchanged at 24% in 2026 and 2027, the conclusions of the three methods are as follows: reasonable valuation after excluding the impact of minority interest gains and losses is $32-$57 trillion.

The three perspectives use different data and logical chains, but the range of the ultimate attributable-caliber falls around $3-4.3 trillion. This convergence itself is a signal: at the current market share and capacity assumptions, the pricing from this order of magnitude is highly self-consistent.

Nomura Securities: Target Price of RMB 116, Implies 1239% Upside

On July 27, Nomura Securities also initiated coverage of Yangtze Memory Technologies for the first time and made a more aggressive judgment.

The firm initiated coverage with a "Buy" rating, a target price of RMB 116, corresponding to approximately 20x PE — twice the current valuation of Intel (about 10x) and well over two times the current valuation of SK Hynix.

Based on an IPO price of 8.66 RMB, a target price of 116 RMB implies an implied gain of 1239.5%, corresponding to a market capitalization of approximately 7.76 trillion RMB.

This number far exceeds Northeast Securities' valuation upper limit of 5.7 trillion RMB. The approximately 2 trillion RMB difference between the two is fundamentally a bet on two core variables: where Changxin's market share ceiling lies and how much growth premium the market should give this company.

2026 Is Just the Beginning! Domestic Substitution Combined with AI Demand, Nomura Gives Changxin Dual Growth Premium

Nomura's underlying logic for a 20x PE premium is based on a triple judgment.

First, structural tightening of the supply side will continue for several years. The bank's core argument is: "Global storage supply is unlikely to loosen significantly in the coming years." Capital expenditures from Samsung, SK Hynix, and Micron have massively shifted to HBM and advanced processes, and the incremental supply of general DRAM is structurally suppressed. This means that the general DRAM market where Changxin operates will maintain a supply-constrained situation for a considerable period of time, rather than the traditional storage cycle of "up for two years, down for two years."

Second, Changxin's share gain logic is "accelerating" rather than "linear." The bank believes that as Changxin's capacity continues to expand and the process migrates from the fourth generation to the fifth generation, the speed of its share gain in the global general DRAM market will outpace market expectations. The current 8% share, the future space corresponding to it in Nomura's model clearly exceeds the 17% upper limit assumed by Northeast Securities. Nomura's implicit assumption of future share, combined with the target market capitalization of 7.76 trillion, corresponds to a share space possibly in the range of 25% to 30% or even higher.

Third, domestic substitution combined with AI demand provides a dual growth premium. The bank believes that Changxin is not just a target for the storage cycle but also a theme target for "domestic substitution." Chinese cloud and smartphone manufacturers' willingness to purchase domestic DRAM continues to rise, providing Changxin with additional incremental demand outside the global cycle. At the same time, the exponential growth in AI server demand for DRAM, where server DRAM per machine is nearly 80 times that of a smartphone, will support a long-term upward shift in ASP. Through the combination of these two logics, Nomura believes Changxin should enjoy a higher valuation premium compared to similar overseas companies, rather than at a discount.

In other words, Nomura does not see 2026 as the peak, but only as the starting point.

In terms of specific financial forecasts, Nomura predicts that ChangXin's sales and net income attributable to the parent company will grow by 63% and 74%, respectively. Key drivers include: capacity expanding from 270,000 wafers per month in 2025 to 450,000 wafers per month in 2027, the increase in value per wafer due to process migration, and the sustained upward trend of DRAM prices in a tight supply environment. Nomura's profit forecast is more aggressive in absolute numbers compared to Northeast Securities, and the assumption of a 20x PE ratio further amplifies the final valuation result.

Supporting this more aggressive assumption is the supply and demand data: global general DRAM capacity estimation shows that a gap will still exist in 2027; in the first quarter of 2026, DRAM contract prices surged by 93% to 98% compared to the previous quarter, significantly exceeding earlier expectations; ChangXin's gross margin in the first quarter of 2026 has risen to 79.16%, with a single-quarter net profit attributable to the parent company of 24.762 billion yuan.

The intensity of the price increase cycle is real-time adjusting all input assumptions of the models.

From Zero to Fourth in the World, ChangXin Took Seven Years

In 2019, ChangXin Technology (formerly known as RuiLi Integrated) launched mainland China's first independently mass-produced 8Gb DDR4, achieving a breakthrough in domestically produced DRAM from scratch.

Seven years later, this company has become the first in China and the fourth in the world among DRAM manufacturers. According to Omdia data, in Q4 2025, ChangXin's global market share reached 7.67%.

In terms of product line, ChangXin has covered the entire generations of DDR4/5 and LPDDR4X/5/5X, and at the end of 2024 ceased the production of its own DDR4, shifting its capacity entirely to high-value products such as DDR5 and LPDDR5/5X. Its customers include Alibaba, Tencent, Byte, and mainstream mobile phone supply chains.

In terms of capacity, the company has three 12-inch wafer fabs in Hefei and one in Beijing, with Northeast Securities expecting capacity to expand from 270,000 wafers per month in 2025 to 450,000 wafers per month in 2027, increasing its global market share from 14% to 17%.

Financial Turning Point: Remarkable Profit Elasticity in the Price Increase Cycle

Changxin's financial trajectory follows the typical plot of a heavy asset storage plant — fixed costs are incurred in a downturn cycle leading to losses, while profits are quickly unleashed in an upturn cycle.

Key milestones are as follows:

· 2025: Net profit attributable to the parent company shifts from a loss of 16.34 billion yuan to a profit of 1.875 billion yuan, with a comprehensive gross profit margin rising to 40.99%, essentially on par with Samsung's (39.38%)

· Q1 2026: Quarterly revenue of 50.8 billion yuan (up 719% year-on-year), gross profit margin of 79.16%, net profit attributable to the parent company of 24.762 billion yuan

· First Half of 2026: Management anticipates revenue of 110-120 billion yuan and net profit attributable to the parent company of 50-57 billion yuan

The core driver of the profit surge is pricing. According to TrendForce's latest survey in June 2026, the contract price of mainstream DRAM in Q1 2026 surged by about 93%-98% month-on-month, far exceeding the previous double-digit forecast range.

Northeast Securities also identified four main risks:

1. Lower-than-expected demand: AI server deployment slowdown or weak recovery in consumer electronics.

2. Price cyclicality decline: A significant price decline of up to 50% compared to the previous cycle occurred in 2022-2023.

3. Capacity and technology iteration falling short of expectations: Delays in the development of the fifth-generation process platform will affect volume and price realization.

4. International trade friction and supply chain constraints: Geopolitical tensions may exacerbate industry chain instability.

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