Shares of CXMT (SHA:688825) experienced a remarkable surge on Monday, closing at 49 yuan, a 465.82% jump from its IPO price of 8.66 yuan. The rally propelled the chipmaker's market capitalization to approximately 3.28 trillion yuan (roughly $484 billion), making it the largest publicly traded company on China's mainland, surpassing Industrial and Commercial Bank of China (SHA:601398).
Valuation and Earnings Context
The dramatic price increase reflects investor optimism surrounding the company's growing profitability in the DRAM market. CXMT's valuation now stands at about 1,748 times its audited 2025 attributable profit of 1.87 billion yuan. However, when annualized preliminary first-half 2026 earnings of 50 billion to 57 billion yuan are considered, the forward P/E multiple drops to between 28.7 and 32.8 times, aligning more closely with global peers like SK Hynix (30.64x), Samsung Electronics (33.62x), and Micron Technology (62.27x).
The company projects first-half revenue between 110 billion and 120 billion yuan, with attributable profit estimated at 50 billion to 57 billion yuan, though these figures are unaudited. This growth is attributed to higher DRAM prices, increased production, and a stronger product portfolio.
Market Dynamics and Trading Activity
The limited free float of just 6.73% of the expanded share base amplified the price movement. Trading volume reached 2.991 billion shares, representing approximately 66.5% of the estimated free float. Total turnover exceeded 140 billion yuan, accounting for over 6.7% of combined trading on the Shanghai and Shenzhen exchanges. The Shanghai Composite rose 1.15%, while the STAR Composite advanced 2.49%.
Industry Outlook and Risks
TrendForce analyst Ellie Wong noted that "the memory market remains tight with price increases expected to continue through the end of 2027," adding that customer efforts to diversify suppliers could benefit CXMT. However, achieving large-scale production remains a challenge. In 2025, Samsung, SK Hynix, and Micron collectively held over 90% of global DRAM sales, while CXMT captured only a 7.67% market share in the fourth quarter.
The company's IPO raised 57.92 billion yuan, marking the largest semiconductor IPO in mainland China, with potential total proceeds reaching 66.61 billion yuan if the overallotment option is fully exercised. Demand was strong, with valid institutional orders approximately 463 times the initial offline quota.
Future Considerations
Risks persist around the memory cycle's volatility. CXMT has warned that reduced AI spending or excess competitor capacity could dampen demand. The DRAM market is highly cyclical and sensitive to price changes. In the coming days, investors will monitor whether trading volumes can sustain after the initial surge. Results from major U.S. tech firms may also influence sentiment regarding AI investment. Ultimately, the true test will come when audited financials replace preliminary estimates.
