Changxin Technology to be listed on the Science and Innovation Board | Sales will be 7x in the first half of 2026, focus is on sustainability of DRAM special demand

First, the conclusion

Changxin Technology is a strategic company responsible for the domestic production of DRAM in China, and sales and profits are expected to rapidly expand in the first half of 2026. If you compare only the issue price with the profit for the first half of 2026, you will hardly see that it is overvalued.

However, it is dangerous to read a low P/E ratio as being cheap.

DRAM companies simultaneously improve sales prices, utilization rates, and inventory valuations when market conditions rise. Since it is a manufacturing industry with large fixed costs, profits increase faster than sales growth, and the PER ratio drops sharply. Conversely, if market conditions reverse, profits may plummet and the P/E ratio itself may lose meaning.

What you should look at when evaluating Changxin Technology's investment is not the profit amount for the first half of 2026, but the following four points.

• Will DRAM prices continue to rise beyond the second half of 2026? *Are yields and utilization rates improving even excluding price effects?
• Can capital investment and depreciation be absorbed by operating cash flow?
• Can equipment, materials, and technology continue to be updated even under U.S. regulations?

Immediately after listing, the low distribution ratio and high subscription ratio may push up the stock price. However, this is not a fixed corporate value, but rather a price formation based on initial supply and demand. This IPO should be evaluated as a memory stock with large fluctuations in profits rather than a "growth stock".

Listing conditions

Changxin Technology will be listed on the Science and Innovation Board of the Shanghai Stock Exchange on July 27, 2026. Stock code is 688825.

If the excess dividend option is fully exercised, the number of issued shares will be approximately 7.691 billion shares, and the proceeds will be approximately 66.31 billion yuan.

The initial funding plan was 29.5 billion yuan, but the final proceeds based on the issue price and number of shares issued rose to about 57.6 billion yuan. This is a large-scale financing, equivalent to approximately 93% of the company's 2025 sales of 61.799 billion yuan.

The listing announcement states that the proceeds will be used to upgrade mass production lines, update DRAM technology, and research and develop next-generation technology. Memory manufacturing requires continuous investment in factories, equipment, and research and development, so the size of the procurement amount is directly linked to the ability to execute the technology roadmap.

Sales will increase 7 times in the first half of 2026

The company's performance forecast for the period January to June 2026 is a major change from the evaluation at the time of listing.

Sales are expected to increase by 612.53% to 677.31% compared to the same period last year, or approximately 7.1 to 7.8 times the previous year. Compared to the full-year sales of 61.799 billion yuan in 2025, it is calculated that the company will earn about 1.8 to 1.9 times more in the first half of 2026 alone.

The company cited improved supply and demand in the DRAM industry, rising product prices, and expanding business scale as reasons for the increase in sales and return to profitability.

On the other hand, this first half forecast has not been audited or reviewed by an auditing firm and is not a profit forecast or performance guarantee. Furthermore, the company has clearly stated that if DRAM prices are currently high and demand growth is less than supply capacity growth, there is a risk that the large profit increase in the first half will not be sustained.

Reason why PER of 308 times and 5 times range coexist

The post-issuance P/E based on 2025 performance based on the issue price of 8.66 yuan is 308.92 times. This is significantly higher than the industry average of 76.32 times and the average of comparable companies of 134.62 times as stated in the listing announcement.

On the other hand, if we simply double the profit attributable to parent company shareholders of 50 billion to 57 billion yuan in the first half of 2026, the annualized profit will be 100 to 114 billion yuan.

上場時価総額5,791.88億元 ÷ 年率換算利益1,000～1,140億元
＝ 約5.1～5.8倍

The actual figure for 2025 is approximately 309 times, and the annualized rate for the first half of 2026 is approximately 5 times.

This does not mean that the company's value has become cheap in just six months. This is because the aspects of profits to be compared are too different. 2025 will be a period just after turning a profit, and the first half of 2026 will be a period where the shortage of DRAM supply and price increases will be strongly reflected.

Memory stocks may appear to have the lowest P/E ratio during boom times and the highest P/E ratio during recession periods. Contrary to normal growth stocks, a low P/E ratio can be a warning signal for a market peak.

Simple evaluation by stock price

The PER ratio by stock price when 2026 first half profit is simply annualized is as follows.

This table is a sensitivity analysis that measures the strength of expectations for each stock price level, and does not indicate the appropriate stock price. Since profits are annualized at the same level as the first half, if market conditions reverse, the P/E ratio will rise sharply.

The average PBR of comparable companies is 9.30x. A simple calculation shows that they are at the same level at around 15.9 yuan, but the comparison includes not only Samsung Electronics, SK Hynix, and Micron, but also companies with different business structures such as TSMC and Zhongxin International. Convergence to the mean cannot be assumed.

Bullish factors

Strategic company for domestic production of DRAM in China

The DRAM market is an oligopolistic market centered on Samsung Electronics, SK Hynix, and Micron. Changxin Technology is one of the few large-scale manufacturers in China responsible for the domestic production of DRAM.

Shareholders include the National Integrated Circuit Industry Investment Fund II and investment entities related to Anhui Province and Hefei City. National capital and support from local governments are strengths in continuing large-scale capital investments over the long term.

However, while policy importance is the basis for the premium, it is also the reason why it is likely to become the target of U.S.-China friction. Policy support and geopolitical risk are two sides of the same construct.

Procurement of 57.6 billion yuan to accelerate production increase and technology update

This time's take-home procurement amount is approximately 57.638 billion yuan. When the excess allocation option is fully exercised, the amount will increase to approximately 66.31 billion yuan.

The funds will be used for manufacturing process, yield, high-performance DRAM, and next-generation memory research and development, as well as capacity expansion. What you should look at after procurement is not the amount of capital investment itself, but the effect of increased production, yield improvement, and increase in product unit price per 1 yuan of investment.

Distribution ratio at initial listing was 6.73%

The number of shares that can be traded at the initial stage of listing is approximately 4.503 billion shares, which is only 6.73% of the total number of shares issued. The initial effective multiplier for online applications was also approximately 243.93x.

Low distribution ratio and strong subscription demand are factors that tighten supply and demand in the early stages of listing. However, the market capitalization of outstanding shares is approximately 39 billion yuan even at the issue price. It is not the scale of a small IPO where the price can be maintained with only a small amount of capital.

Five major risks

1. DRAM price is a typical cyclical product

According to the listing announcement, DRAM prices ranged from $1.78 to $7.89 per GB from 2015 to 2025. The average selling price of Changxin Technology's main DRAM products will increase by 55.08% year-on-year in 2024 and 33.69% in 2025.

The sharp increase in profits in the first half of 2026 is highly dependent on this price increase. If a slowdown in AI investment, a reduction in capital investment by cloud companies, an increase in production by major overseas companies, and a slump in demand for PCs and smartphones come together, the supply-demand balance could reverse.

2. Fixed assets and depreciation are heavy

Fixed assets at the end of 2025 were approximately 183.024 billion yuan, accounting for 54.34% of total assets. Depreciation expenses in 2025 were approximately 24.680 billion yuan.

Large-scale equipment boosts profits when prices rise, but depreciation remains even when market conditions worsen. The profit attributable to owners of the parent company from 2023 to 2025 changed significantly: ▲16.34 billion yuan, ▲7.145 billion yuan, and 1.875 billion yuan.

There will be an accumulated outstanding loss of approximately 36.65 billion yuan at the end of 2025, which also indicates that the company may not be able to pay cash dividends in the short term.

3. Inventory write-downs affect profits

The inventory balance at the end of 2025 is approximately 29.390 billion yuan. If the DRAM price falls below the manufacturing cost, an inventory write-down will occur.

In 2023, when there was a DRAM recession, an inventory valuation loss of approximately 11.5 billion yuan was recorded. The higher the current price, the more cautious we need to be in stock valuation in the event of a pullback.

4. Low economic interest in important subsidiaries

Changxin Technology directly and indirectly owns 30.68% of its major subsidiaries, Changxin Xinqiao, and 31.72% of Changxin Current Collection. The voting rights through the concerted action agreement are 73.01% and 75.32%, respectively, and consolidate the two companies.

However, not all subsidiary profits belong to Changxin Technology shareholders. In the first half of 2026, net profit will be 66 billion to 75 billion yuan, and profit attributable to parent company shareholders will be 50 to 57 billion yuan. For evaluation, it is necessary to use profit attributable to owners of the parent company, rather than consolidated net income.

5. US-China friction and export restrictions

On June 8, 2026, the U.S. Department of Defense added Changxin Cunchu, a subsidiary of Changxin Technology, to the list of Chinese military-related companies pursuant to Section 1260H of the National Defense Authorization Act.

The company says there is currently no material adverse impact on its day-to-day production operations or its ability to continue as a going concern. However, the 1260H list and the export control entity list are different systems. This designation alone does not immediately result in a complete ban on exports of U.S. products.

However, if regulations on equipment, parts, materials, EDA, and maintenance services are tightened in the future, this may affect miniaturization and mass production plans.

Supply and demand on the first day of listing

IPO stocks on the Science and Technology Board have no price range restrictions for the first five business days after listing. As a general rule, from the 6th business day onward, a price range limit of 20% of the previous day's price will be applied.

Changxin Technology will be subject to margin transactions and lending transactions from the first day of listing. A low distribution ratio does not necessarily lead to an increase, as there can be not only buying demand but also selling demand.

For 30 days after listing, there is a so-called green shoe option for excess distribution. Although lead underwriter securities may be repurchased when the market price falls below the issue price, this system does not guarantee that the price will be maintained at 8.66 yuan.

What the market will test on the first day is not just expectations for domestic production of Chinese semiconductors. The question is to what price the A-share market can accept the huge market capitalization of approximately 579.2 billion yuan. The larger the initial price rise, the more likely it is that first-half profits will continue.

KPIs that investors should look at

Of particular importance are the gross profit margin and profit attributable to parent company shareholders for the July-December 2026 period. If we can maintain a level close to the first half, it will be easier to evaluate improvements other than price increases. On the other hand, if the profit margin suddenly declines even though the selling price remains unchanged, the annualized conversion of first-half profit will not work.

Risk scenario

Bullish scenario

Demand for AI servers, DDR5, and LPDDR5/5X will continue, and the DRAM supply shortage will continue until 2027. Changxin Technology will increase production and improve yield at the same time, narrowing the gap with major overseas companies. If it is confirmed that the profits in the first half are not just a temporary price effect, it will be easier to maintain the domestic production premium.

Neutral scenario

Although DRAM price growth will slow, it will be offset by improvements in shipment volume and product mix. Even if the profit for the second half of 2026 is lower than the first half, we will maintain a surplus, and capital investment using the proceeds will lead to the next product generation. In this case, the evaluation will be based on normal profit, which is higher than the annualized PER for the first half.

Bearish scenario

Due to the combination of increased production by major overseas companies and a slowdown in AI investment, DRAM prices will fall. High depreciation costs and inventory valuation losses put pressure on profits, and it turns out that profits in the first half of 2026 were at the peak of market conditions. If US regulations extend to equipment and material procurement, increased production and technology updates will be delayed.

The conditions to disprove the bullish scenario are that the gross profit margin declines even before the decline in average selling prices, and that shipment volume and yield do not increase relative to capital investment. The condition to disprove the bearish scenario is that operating cash flow and profit attributable to owners of the parent company remain stable even if price increases come to a halt.

[Summary]

Changxin Technology is a large-scale IPO that symbolizes China's domestic production of DRAM. Compared to the issue price of 8.66 yuan, the actual PER in 2025 is 308.92 times, but if you convert the first half profit in 2026 into an annualized rate, it will drop to about 5 times.

This difference indicates the magnitude of profit fluctuations in the DRAM business rather than its undervalue.

Immediately after listing, the distribution ratio of 6.73%, the application ratio of approximately 244 times, and expectations for domestic production of semiconductors may support supply and demand. However, the higher the stock price rises, the more the market starts to factor in continued special demand for DRAM and high profit margins.

What you should look at after listing is not the initial price, but the average selling price, gross profit margin, operating cash flow, inventory valuation, and profit attributable to owners of the parent company for the second half of 2026. Whether Changxin Technology will progress from being a `DRAM company with a policy theme'' to `a manufacturer that can maintain profits even when market conditions deteriorate'' will become clear only in the next downturn.

Related pages

• Changxin Technology to make a purchase on July 16th, one of the largest IPOs in 2026 due to AI memory demand and the US-China semiconductor divide
• Changxin Technology (CXMT) IPO analysis | How is the favorite for China's domestic production of DRAM evaluated by A shares?
• New China A-share trading rules come into effect on July 6th

Source

• Shanghai Stock Exchange "Changxin Science and Technology First Public Issue Publication Announcement on Technology and Innovation Board"
• Shanghai Stock Exchange "Announcement of Changxin Science and Technology Primary Public Issuance Record and Current Science and Technology Board Issuance Results" *U.S. Department of Defense “Section List of Chinese military-related companies based on 1260H”