Changxin Memory Technologies (CXMT), a Chinese company challenging the DRAM market dominated by Samsung Electronics and SK Hynix, is expected to see a significant increase in its third-quarter revenue and net profit, driven by rising demand for artificial intelligence (AI). CXMT also plans to initiate a share buyback worth up to 4 billion yuan.
According to reports from the Science and Technology Innovation Board Daily and the Economic Daily on October 17, CXMT projected that its third-quarter revenue would rise by 589% to 619% year-on-year, reaching between 114.7 billion and 119.7 billion yuan (approximately $22.9 billion to $23.9 billion). This marks a 15% to 20% increase compared to the second quarter.
The company anticipates that its net profit attributable to shareholders will be between 53.395 billion and 54.895 billion yuan (about $10.6 billion to $10.9 billion), reflecting a 1% to 3.8% increase from the second quarter's net profit of 52.843 billion yuan, and a return to profitability compared to a loss in the same period last year.
For the first three quarters of this year, CXMT estimates cumulative revenue of 265 billion to 270 billion yuan (approximately $53 billion to $54 billion), a 725% to 741% increase from 32.1 billion yuan during the same period last year.
Net profit for the same period is expected to reach between 131 billion and 132.5 billion yuan (around $26.2 billion to $26.5 billion), a significant turnaround from a net loss of 5.3 billion yuan in the first three quarters of last year.
CXMT attributed its improved performance to the growing demand for AI computing power, rising DRAM prices, and enhanced production efficiency.
The company stated, "Since the second half of last year, the demand for AI computing power has rapidly increased. Globally, the DRAM industry has been experiencing a boom, leading to supply shortages and significant price increases."
Additionally, CXMT noted that it has steadily advanced its production capacity construction, product research and development (R&D), and process technology upgrades, resulting in increased output per wafer and improved utilization rates. "The economies of scale are continuing to manifest," the company added.
CXMT is also moving forward with its share buyback plan. Chairman Zhu Yiming proposed using company capital or self-financed funds to buy back shares worth 1 billion to 2 billion yuan (approximately $200 million to $400 million).
Considering that the typical share buyback amounts for companies listed on the Science and Technology Innovation Board, often referred to as China's Nasdaq, range from 200 million to 800 million yuan, this plan is relatively substantial. Analysts interpret this as a positive signal regarding the management's assessment of the company's value.
Currently, only about 6% of CXMT's shares are freely tradable. If the buyback of 2 billion yuan is executed, it could purchase approximately 1% of the current circulating shares, potentially reducing supply and bolstering investor sentiment.
CXMT explained that the share buyback proposal reflects confidence in the company's development and aims to protect investor interests and enhance trust.
Despite a recent downturn in global semiconductor stocks, CXMT's shares fell 5.24% on October 15, causing its market capitalization to drop below 3 trillion yuan (approximately $600 billion), relinquishing its position as the top market cap on the mainland stock exchange. However, on October 16, the stock rebounded by 3.28%, reclaiming a market cap of 3 trillion yuan and regaining its top position.
Earlier, CXMT raised up to 66.61 billion yuan (approximately $13.2 billion) through its initial public offering (IPO) in July. The stock surged on its first day of trading, briefly making it the highest market cap on the mainland stock exchange.
* This article has been translated by AI.
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