Key Takeaways:
UBS initiated coverage on ChangXin Technology with a buy rating and 70 yuan target, implying 33% upside from the 52.48 yuan close.
"ChangXin sits at the intersection of a global DRAM supply shortage, AI-driven demand and accelerating domestic substitution," the UBS team said in its first-coverage note.
UBS forecasts net profit of 139.7 billion yuan in 2026, 332.8 billion yuan in 2027 and 428.2 billion yuan in 2028, a 75% compound annual growth rate that runs about 19% above Wind consensus. The bank expects EBIT margin to hold at 75% to 85% over the period, well above historical DRAM industry levels.
The rating marks the first bulge-bracket coverage of the Chinese memory maker since its record listing. ChangXin debuted on the Shanghai STAR Market on July 27 at 8.66 yuan, opened at 49.50 yuan and closed the first session at 49 yuan, a gain of roughly 466% that briefly pushed market value above 3.2 trillion yuan. The IPO raised about 57.9 billion yuan, Asia's largest listing of 2026.
UBS's 70 yuan target equates to 8.6 times forecast 2027 book value, a roughly 40% premium to the 6.1 times average for A-share wafer foundries. The model assumes average return on equity of 37% from 2028 to 2030 and an 8.5% cost of capital.
The thesis rests on three pillars: a DRAM supply shortage the bank expects to last until the second quarter of 2028, capacity expansion that lifts global share, and a product mix shift toward server DRAM and high-bandwidth memory. UBS sees DDR contract prices climbing from $0.40 per gigabit in 2025 to $1.61 in 2026 and $2.24 in 2027, a two-year compound growth rate of 137%.
Server DRAM is the growth engine. UBS projects server DRAM bit demand to compound at 66% annually from 2025 to 2027, with AI servers carrying 27 times the DRAM configuration of traditional machines. ChangXin's China server DRAM share is seen rising from 12% in 2025 to about 20% in 2028, with related bit shipments growing from 49 billion gigabytes to 295 billion, an 82% compound rate.
Demand is already locked in. ByteDance has signed a DRAM purchase agreement worth more than $7 billion, while Tencent has committed to a server DRAM supply deal exceeding 20 billion yuan. Transsion said more than half its DRAM purchases now come from ChangXin.
Margins are the other pillar. ChangXin's first-quarter operating margin hit 70%, and UBS expects gross margin of 82%, 89% and 89% across 2026 to 2028 as depreciation falls to 6% to 10% of revenue from 40% to 119% in prior years. Server DRAM's revenue share is seen rising to about 51% by 2028 from 26%, while mobile DRAM falls to 38% from 59%.
The company's first-half guidance points to revenue of 110 billion to 120 billion yuan and net profit of 50 billion to 57 billion yuan, after first-quarter revenue of 50.8 billion yuan, up more than 700% year over year.
The buy rating gives institutional investors a benchmark for valuing China's largest DRAM producer as it rides a pricing upcycle. The next event to watch is the first-half earnings report, due in the coming weeks, which will test whether the 70% operating margin holds as capacity ramps.
This article is for informational purposes only and does not constitute investment advice.
