Chinese investors seeking shares in CXMT’s $8.6 billion IPO are betting the Chinese chipmaker’s valuation will soar as much as 10-fold after its Shanghai debut, on the back of an AI-led upcycle and Beijing’s ambition to be technologically self-sufficient. The share offering by CXMT, or ChangXin Memory Technologies, will be Asia’s biggest share sale so far this year, priced at 8.66 yuan a share for an IPO valuation of 579.18 billion yuan. YourDailyAnalysis starts with the valuation math investors are actually betting on: Wu Zhou, a fund manager at Shenzhen Deyuan Investment, expects CXMT’s valuation to top 3 trillion yuan after listing and possibly hit 5 trillion yuan, meaning the retail frenzy here is pricing in a five-to-nine-fold jump from the IPO valuation, not a modest debut pop.
The valuation the market is already accepting at IPO pricing is aggressive by conventional standards, which is the detail that should temper the 10x framing. CXMT itself said in a Wednesday statement that the IPO price valued the company at over 300 times its 2025 earnings and roughly 5 times its book value. YourDailyAnalysis treats that 300-times-earnings multiple as the number that should anchor any read of this IPO: even before the anticipated first-day pop, CXMT is being priced far above what conventional valuation frameworks would support for a memory chipmaker, a category that has historically traded at much lower multiples given its cyclicality.
The bull case rests on both genuine earnings momentum and a specific comparison to established rivals. CXMT’s first-quarter revenue hit 50.8 billion yuan, up 700% from a year earlier, while it recorded a net profit of 25 billion yuan, swinging from a year-earlier loss of 1.6 billion yuan; fund manager Wu expects CXMT’s profit to reach 100 billion yuan this year. “If you look at Micron, Samsung and SK Hynix, they are all trillion-dollar-class companies despite the recent volatility,” said Eddie Tam, chief investment officer at Hong Kong’s Central Asset Investments, who expects CXMT’s shares to “surge several-fold” on their first trading day.
CXMT’s actual competitive position is more modest than the trillion-dollar comparison implies, which is worth stating plainly. CXMT is the world’s fourth-largest DRAM maker, behind SK Hynix, Samsung Electronics and Micron, and Tam himself acknowledged China’s two-to-four-year lag behind top industry players in DRAM and high-bandwidth memory technologies even while calling the IPO valuation cheap. YourDailyAnalysis reads that acknowledged technology gap as the central tension in the bull case: investors are pricing CXMT as a near-peer to trillion-dollar incumbents while the company’s own competitive position, by its most bullish backers’ own admission, still trails those same incumbents by several years.
The strategic and political dimension adds a layer beyond pure valuation math. CXMT’s public offering represents Beijing’s latest effort to channel capital into strategic industries crucial to its rivalry with Washington, and the company was designated a Chinese military company by the U.S. Department of Defense under the Biden administration; CXMT has said it plans to use IPO proceeds to upgrade production lines and technologies. That designation adds a geopolitical risk dimension to the stock that a purely commercial memory-chip investment wouldn’t carry, since it could affect the company’s access to certain markets, technologies or partners going forward.
Recent precedent for Chinese chipmaker debuts offers a cautionary note that some investors are choosing to set aside. China’s top contract chipmaker, Semiconductor Manufacturing International Corp, listed in Shanghai in July 2020, and its stock almost halved from its debut price in a bit more than two months. Not every investor is dismissing that risk: Yao Kai, a fund manager at Shanghai Zhuangyan Private Fund Management, said he will bid for CXMT’s shares “to try luck” but is worried the listing could knock down other tech stocks, given China’s lottery-based allocation system for a stock already in short supply.
Watch CXMT’s July 27 Shanghai debut for whether first-day trading actually approaches the several-fold surge bulls like Tam are forecasting, and watch whether the stock’s post-debut trajectory mirrors SMIC’s sharp reversal from 2020 or instead sustains its valuation on continued earnings momentum. Your Daily Analysis views CXMT’s actual quarterly earnings delivery against Wu’s 100-billion-yuan profit forecast as the more reliable longer-term signal than the debut-day price action, since a stock priced at 300 times trailing earnings has very little room for any earnings disappointment before the valuation becomes difficult to defend.
