Summary of Key Points
As the "first stock" in China's DRAM storage industry, Changxin Technology made its debut on the STAR Market, with its share price soaring by 471% on the first day. Its market value reached 3.66 trillion yuan at midday (the highest among A-share companies), while the stock prices of overseas storage giants Samsung and SK Hynix fell. The sharp increase on the first day was mainly driven by a "liquidity premium" (more buyers than sellers). In the long term, Changxin is still considered a cyclical stock. However, due to domestic substitution, breakthroughs in HBM technology, and rapid capacity expansion, its valuation is expected to be higher than that of its overseas counterparts, with a potential ceiling of 4.5 trillion yuan.
Detailed Analysis
1. Sharp Rise on the First Day: Not a Direct Reflection of "Value," but Rather Due to Limited Stock Availability
On the first day of trading, only 6.73% of Changxin's shares were available for sale (the remaining 93% were locked up, with some not being tradable until 2027). Additionally, foreign investors were not allowed to subscribe directly due to STAR Market regulations, forcing interested funds to compete in the secondary market. Given that both institutional and retail investors are optimistic about the domestic storage sector (with an abandonment rate of just 0.17%, far lower than the 5-10% for new stocks on the STAR Market last year), and institutional bids reached as high as 65 yuan per share (with an issue price of only 8.66 yuan), the stock price soared. In simple terms, there was a large demand with limited supply, leading to a dramatic increase in price.
2. Essentially a Cyclical Stock: Profits Fluctuate with DRAM Prices
DRAM is a standardized "electronic commodity," and its price varies significantly with supply and demand. For example, in 2023, prices plummeted, resulting in a loss of 16.3 billion yuan for Changxin; in 2026, the cycle turned upward, generating profits of 50-57 billion yuan in just half a year. This is similar to the livestock industry—high prices bring high profits, while low prices result in losses. It's important to note that at the peak of the cycle, profits are highest, but the resulting valuation (PE ratio) is lower, which could lead to being trapped if purchased at that time. Currently, the PE ratios of overseas giants Samsung and SK Hynix are low, but their stock prices are still falling due to market concerns about the cycle reaching its peak.
3. More "Valuable" than Overseas Giants: Domestic Substitution and Faster Growth Rate Are Key
Changxin is the only domestic company capable of producing DRAM, and there is a strong demand for domestic alternatives (such as in smartphones and servers, which previously relied on imports). Moreover, its capacity expansion is faster than that of the overseas giants. While the three major overseas companies plan to increase production by only 5% in 2026, Changxin's capacity is expected to be close to that of Micron. This is similar to CATL in the lithium battery industry: although there are cyclical fluctuations, CATL's larger scale and domestic substitution give it a higher valuation than its competitors. The same applies to Changxin, which will have stronger resilience and growth potential despite cycle variations.
4. HBM Technology: The Ace to Break the Cycle
HBM is a high-end memory used in AI applications, offering faster performance and lower power consumption compared to standard DRAM. It requires collaboration with GPU manufacturers (such as NVIDIA) for customization. If Changxin can make breakthroughs in HBM technology:
- It will no longer be solely dependent on DRAM prices and its growth potential will increase;
- It will gain a foothold in the AI supply chain, potentially boosting its valuation, as AI is one of the hottest sectors today. Although Changxin is still working on this, it could be the key to breaking free from the cyclical nature of the DRAM market.
5. Where Is the Ceiling? Growth Until 4.5 Trillion Yuan, Then the Cycle Matters
Based on current trends:
- If Changxin's capacity catches up with Micron and it makes breakthroughs in HBM technology (with a valuation similar to Micron's trillion-dollar market value, at a 60% discount), its market value could reach 4.5 trillion yuan;
- Before reaching this level, the focus should be on its capacity expansion and HBM progress (growth is key);
- Once it exceeds 4.5 trillion yuan, the impact of cyclical fluctuations will need to be considered, given DRAM's inherent cyclical nature.
Conclusion
Changxin Technology's listing marks a milestone for China's domestic storage industry. The sharp rise on the first day was mainly driven by short-term market factors. In the long term, it is both a cyclical stock with opportunities for growth due to domestic substitution and technological advancements. Investors should be cautious: avoid chasing high prices in the short term (as the liquidity premium will gradually diminish), and focus on its capacity expansion, HBM progress, and overall market position over the longer term.