Changxin Becomes the New King of A-shares: How to Reasonably Value It?

Original Title: "How to Value Changxin?"
Original Author: Long Yue, Wall Street Insights

Changxin Technology (688825) is set to 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 the exercise of the over-allotment option), resulting in a total market value of 579.188 billion yuan. However, the market clearly does not intend to stay at this price.
Northeast Securities analyst Li Jiu has evaluated Changxin from three independent perspectives, concluding that the valuation converges 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 potential increase of 1239%, corresponding to a market value of approximately 7.76 trillion yuan—1.4 times the upper limit set by Northeast Securities. The core of the divergence between the two institutions lies in their judgment of Changxin's long-term market share ceiling—Northeast Securities assumes a baseline of 17%, while Nomura bets on a larger share space and higher growth premium.
The aforementioned valuations may not be exaggerated. Changxin is a unique presence in A-shares: a pure DRAM IDM leader, possessing full-chain capabilities in design and manufacturing, currently in a performance explosion period characterized by "cycle reversal + share increase." The company's products cover DDR4/5 and LPDDR4X/5/5X, and have entered the supply chains of Alibaba, Tencent, ByteDance, and mainstream mobile phone manufacturers. According to Omdia data, **the company's global market share is projected to be 7.67% by Q4 2025, ranking first in China and fourth globally. Benefiting from rising storage prices and the release of high-end products, the company's performance elasticity is accelerating.**
With a continuous supply-demand gap in DRAM, Changxin enjoys the dual benefits of "rising volume and price + domestic substitution." The real issue is not whether it is worth money, but which yardstick to use for measurement.

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

**Logic**: Since DRAM is a globally unified market, the market value of overseas-listed storage companies already includes the pricing for "every percentage point of market share." By using the market values of comparable companies in the U.S. stock market, we can reverse-engineer how much market value corresponds to "1% of future global market share," and then multiply by Changxin's future share.

Operation: Micron and SanDisk have equal NAND shares (both at 13%), so the market value of Micron (a company involved in both DRAM and NAND) minus the market value of SanDisk (a pure NAND company) equals the market value corresponding to Micron's DRAM business—$102.2 billion - $23.08 billion = $79.12 billion. Dividing this by Micron's 19.85% future DRAM market share gives us approximately $39.86 billion for each 1% of future market share.

Conclusion: As a pure DRAM entity, Changxin's future share of 17% (currently about 8%) corresponds to a market value of approximately $67.76 billion, equivalent to about 4.58 trillion yuan (calculated at an exchange rate of 6.77). After excluding the minority interest loss of about 24%, the attributable parent company value is approximately 3.49 trillion yuan.

Backtesting Verification: The calculated market value of SK Hynix is about 9.44% higher than the actual, while Kioxia is only 0.66% higher, with results closely aligning with actual market values.

### Perspective Two: Earnings Split PE Valuation—Target Market Value 2.85 Trillion to 4.27 Trillion Yuan
The second method is more fundamental: it directly predicts Changxin's own profits without relying on external anchors. The cost structure of storage companies is highly standardized, with fixed costs primarily determined by depreciation and capital expenditure scale; variable costs change linearly with shipment volume. Since the prospectus does not disclose actual wafer production capacity data, we estimate using the original value of fixed assets as a proxy for production capacity, multiplying by the utilization rate and sales rate to estimate sales, and then combining with ASP to obtain revenue.

Logic: Break down revenue (capacity × utilization rate × sales rate × ASP) and costs (fixed cost depreciation + variable costs), predict net profit, and assign a PE multiple.

Key Predictions:

· Revenue of 471.6 billion yuan in 2027, gross margin of 86.96%, net profit of 374.7 billion yuan (overall basis)

· After excluding minority interest losses (assuming a constant 24% share), the attributable net profit is approximately 284.8 billion yuan

Valuation: Northeast Securities believes that Micron and SK Hynix correspond to PE ratios of 7.51 and 7.94 times for 2027, respectively, but Changxin is in a phase of rapid share increase (with future share expected to reach around 30%), thus granting a growth premium. With a PE of 10-15 times, after excluding minority interest losses, the corresponding market value based on attributable net profit is approximately 2.85 trillion to 4.27 trillion yuan.

Perspective Three: Unit Capacity Relative Valuation—Target Market Value 3.22 Trillion to 3.99 Trillion Yuan

Logic: Divide the market value of overseas storage companies by their monthly production capacity to obtain the "market value per 10,000 wafers/month capacity," and then multiply by Changxin's capacity plan.

Reference: The market value per 10,000 wafers/month capacity for the three major manufacturers is concentrated in the range of $15.8 billion to $19.8 billion—$16.045 billion for SK Hynix, $19.780 billion for Micron, and $15.891 billion for Samsung.

Conclusion: By 2027, Changxin's capacity is projected to be 450,000 wafers/month, corresponding to a market value of:

· Optimistic scenario (average of the three major manufacturers $17.2 billion/10,000 wafers): 525.18 billion yuan

· Neutral scenario (including Taiwanese manufacturers' average $13.9 billion/10,000 wafers): 423.27 billion yuan

After excluding minority interest losses, this corresponds to approximately 3.22 trillion to 3.99 trillion yuan.

Summary of Three Methods: Converging at 3.2 Trillion to 5.7 Trillion Yuan

Northeast Securities points out that Changxin's minority interest losses will reach as high as 73.76% in 2025, far exceeding those of Samsung, Hynix, and Micron (all below 1%), and the valuation must exclude this portion's impact.

Assuming that the minority interest losses remain at 24% in 2026 and 2027, the conclusions from the three methods are as follows: after excluding the impact of minority interest losses, the reasonable valuation is 3.2~5.7 trillion yuan.

The data used and logical chains in the three perspectives differ, but the final attributable parent company value range is all around 3~4.3 trillion yuan. This convergence itself is a signal: under the current share and capacity assumptions, this level of pricing has strong self-consistency.

Nomura Securities: Target Price 116 Yuan, Implied Increase of 1239%

On July 27, Nomura Securities also initiated coverage of Changxin Technology, providing a more aggressive judgment.

The firm initiated coverage with a "buy" rating and a target price of 116 yuan, corresponding to approximately 20 times PE—twice the current valuation of Micron (around 10 times) and more than twice that of SK Hynix.

Calculating from the IPO issue price of 8.66 yuan, the target price of 116 yuan implies an implied increase of 1239.5%, corresponding to a market value of approximately 7.76 trillion yuan.

This figure far exceeds the upper limit of Northeast Securities' valuation range of 5.7 trillion, with a gap of about 2 trillion yuan between the two, fundamentally reflecting different bets on two core variables: where the ceiling of Changxin's market share lies and how much growth premium the market should assign to this company.

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

Nomura's logic for granting a 20 times PE premium is based on three key judgments.

First, structural tightening on the supply side will continue for several years. The core argument of the firm is: "Global storage supply is unlikely to loosen in the coming years." Capital expenditures of Samsung, SK Hynix, and Micron have largely shifted towards HBM and advanced processes, structurally suppressing the new supply of general DRAM. This means that the general DRAM market where Changxin operates will maintain a supply-demand imbalance for a considerable time, rather than the traditional storage cycle of "two years up, two years down."

Second, Changxin's share increase logic is "accelerated" rather than "linear." The firm predicts that as Changxin's capacity continues to expand and its processes migrate from the fourth to the fifth generation, its share increase speed in the global general DRAM market will exceed market expectations. The current share of about 8% corresponds to a future space that is clearly much larger than the 17% upper limit assumed by Northeast Securities. Nomura's implied future share assumptions, combined with the target market value of 7.76 trillion, suggest that the share space could be in the range of 25% to 30%, or even higher.

Third, domestic substitution combined with AI demand provides a dual growth premium. The firm believes that Changxin is not only a storage cycle target but also a "domestic substitution" theme target. The willingness of Chinese cloud providers and mobile manufacturers to procure domestic DRAM continues to rise, providing Changxin with additional increments independent of the global cycle. Meanwhile, the demand for DRAM from AI servers is growing exponentially, with the DRAM load per server being nearly 80 times that of smartphones. This structural change in demand will support the upward shift of ASP in the long term. With these two logics combined, Nomura believes that Changxin should enjoy a higher valuation premium than overseas peers, rather than a discount.

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

In specific financial forecasts, Nomura predicts that Changxin's sales and attributable net profit will grow by 63% and 74%, respectively. The driving factors include: capacity expanding from 270,000 wafers/month in 2025 to 450,000 wafers/month in 2027, the increase in value per wafer due to process migration, and the continuous rise in DRAM average price against the backdrop of tightening supply. Nomura's profit forecast is more aggressive in absolute numbers compared to Northeast Securities, and the 20 times PE multiple assumption further amplifies the final valuation result.

Supporting this more aggressive assumption is the supply-demand data: global ordinary DRAM capacity estimates show that a gap will still exist in 2027; in Q1 2026, DRAM contract prices surged by 93% to 98% quarter-on-quarter, far exceeding previous double-digit forecasts; Changxin's gross margin in Q1 2026 has risen to 79.16%, with a single-quarter attributable net profit of 24.762 billion yuan.

The height of the price increase cycle is currently correcting all model input assumptions in real-time.

From Zero to Global Fourth, Changxin Took Seven Years

In 2019, Changxin Technology (formerly Ruili Integrated) launched the first domestically produced 8Gb DDR4 in mainland China, achieving a breakthrough from zero to one in domestic DRAM.

Seven years later, this company has become the first in China and the fourth globally in DRAM manufacturing. According to Omdia data, Changxin's global market share is projected to reach 7.67% by Q4 2025.

On the product line, Changxin has covered all generations of DDR4/5 and LPDDR4X/5/5X, and will stop producing its own DDR4 by the end of 2024, fully shifting capacity to higher-value products like DDR5 and LPDDR5/5X. Customers include Alibaba, Tencent, ByteDance, and mainstream mobile supply chains.

In terms of capacity, the company has three 12-inch wafer fabs: two in Hefei and one in Beijing. Northeast Securities expects capacity to expand from 270,000 wafers/month in 2025 to 450,000 wafers/month in 2027, with global share rising from 14% to 17%.

### Financial Turning Point: Profit Elasticity is Amazing During the Price Increase Cycle

Changxin's financial path is a typical script for heavy-asset storage manufacturers—losses occur during the down cycle due to fixed costs being front-loaded, while profits are rapidly released during the up cycle.

Key milestones are as follows:

· 2025: Attributable net profit turns from a loss of 16.34 billion yuan to a profit of 1.875 billion yuan, with a comprehensive gross margin rising to 40.99%, roughly on par with Samsung (39.38%).

· Q1 2026: Single-quarter revenue of 50.8 billion yuan (YoY +719%), gross margin of 79.16%, attributable net profit of 24.762 billion yuan.

· First half of 2026: Management expects revenue of 110-120 billion yuan and attributable net profit of 50-57 billion yuan.

The core driver of profit explosion is price. According to TrendForce's latest survey in June 2026, the contract price of general DRAM surged by about 93%-98% quarter-on-quarter, far exceeding previous double-digit forecasts.

Northeast Securities also listed four major risks:

1. Demand below expectations: Slowdown in AI server construction or weak recovery in consumer electronics.

2. Price cyclical downturn: There was a deep downturn in prices in 2022-2023, with declines reaching 50% compared to the pre-cycle period.

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

4. International trade friction and supply chain constraints: Rising geopolitical tensions may exacerbate instability in the industry chain.

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