The trading frenzy was staggering. About 141 billion yuan worth of CXMT shares changed hands on Monday alone. That is equal to nearly 7% of all trading activity across China's entire onshore market for the day.
It also raised 66.6 billion yuan in the IPO, making it the second-largest in Chinese history. Individual investors went all in.
Other Chinese chip stocks have also seen massive first-day gains recently: Semight Instruments Co. climbed 876% in April, beating MetaX Integrated Circuits Shanghai Co.'s 693% surge in December, while Moore Threads Technology Co. advanced 425% in December.
CXMT is now considered China's leading candidate to compete with overseas DRAM suppliers - DRAM being a vital part of devices ranging from smartphones to AI servers. As the world's fourth-largest DRAM manufacturer, it offers investors a unique pure-play opportunity to wager on China's involvement in the global AI infrastructure expansion.
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"Ao Fei, managing director at Beijing Xinhan Capital, said the stock's opening was largely in line with his expectations, but the sharp move higher after the open was remarkable. He added that he would not rule out a period of speculative frenzy in the first few trading days, given how scarce pure-play memory stocks are in China's A-share market."
Beijing Nuohua Investment Management Co. fund manager Zeng Jiqing observed that CXMT has considerable potential for technological advancement and market share growth. "There's still enormous room for growth," he said.
The company also has some big near-term goals. The company plans to double its production capacity in 2024 and create a vertically integrated supply chain covering everything from design to assembly. Apple Inc. is currently talking with CXMT about buying its chips for products sold within China.
Nomura Holdings Inc. analyst Donnie Teng started covering the stock with a buy recommendation and a 116-yuan price target. Huaxi Securities forecasts CXMT's market cap will reach 5 trillion yuan based on 40 times its estimated 2026 earnings. Huaxi projects revenue will exceed 572.7 billion yuan by 2028, up from an anticipated 277.7 billion yuan for the current year, while net profit is forecast to hit 290 billion yuan.
The strong first-day performance might also boost sentiment for other companies planning IPOs. Other firms preparing to go public, such as competitor Yangtze Memory Technologies Co. and Kunlunxin (Baidu's chip arm), could benefit from the positive market mood as well. DeepSeek could submit its IPO filing later this year.
CXMT might qualify for stock connect inclusion by the third-quarter review in late August, with implementation possibly in mid-September at the earliest.
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