Citi lifts MONTAGE TECH target 39% to HKD425 on AI earnings surge

Citi raised MONTAGE TECH's H-share target price 39 percent to HKD425 from HKD305, reiterating a Buy rating after record 2Q26 results.

"MONTAGE TECH is one of the best AI infrastructure plays among China's semiconductor companies," Citi said in a research note, citing record revenue and net profit in the second quarter.

The broker also raised its A-share target for LQKJ (688008.SH) to RMB320 from RMB245. MONTAGE TECH reported 1H26 net profit of RMB1.997 billion, up 72.3 percent year over year, with an interim dividend of RMB2 per 10 shares. While gross margin came in slightly below expectations, Citi expects accelerating revenue growth to drive stronger earnings through 2028.

The upgrade reflects upward forecast revisions and a rollover of the valuation benchmark. Citi views MONTAGE TECH as a key beneficiary of AI infrastructure demand and China's domestic substitution trend, noting the stock's valuation remains undemanding. Shares fell 2.1 percent on the day, with short selling at HKD213.15 million, a 16.4 percent ratio.

MONTAGE TECH has been actively repurchasing shares. The company bought back 100,000 A-shares on Sept. 1 for approximately RMB19.85 million at prices between RMB196.80 and RMB200.58 per share. Cumulative repurchases total 910,000 shares worth RMB183 million, part of a RMB300 million to RMB600 million buyback program running through Oct. 23.

The company's dual-listed structure — H-shares on the Hong Kong exchange and A-shares on the STAR Market — gives investors two ways to access the AI semiconductor theme. Peers including Hygon Information and Cambricon also reported strong first-half growth, with 64 of 74 chip design companies on the STAR Market posting positive revenue growth.

The Citi upgrade adds to a growing list of bullish calls on China's AI semiconductor names as domestic substitution accelerates. Investors will watch whether MONTAGE TECH can sustain its growth trajectory through the second half, with the next earnings report expected in the coming months.

This article is for informational purposes only and does not constitute investment advice.