Gross profit margin exceeds Samsung, not a single word about HBM: Detailed interpretation of ChangXin IPO details

Written by: Chaoxiang Research

On July 9, ChangXin Memory Technologies (CXMT) disclosed its prospectus and officially launched its IPO on the STAR Market: inquiry on July 13, subscription on July 16, stock code 688825. The issuance consists of 6.69B new shares, accounting for 10% of the total share capital after issuance, with no sale of existing shares. If the over-allotment option is fully exercised, the total can expand to 7.69B shares. Half of the initial issuance is locked for strategic placement, of which senior management and core employee asset management plans subscribe for 10%, and CICC Wealth and China Securities Construction Investment each follow with 2%. The planned fundraising is 29.5 billion yuan, second only to SMIC, making it the second largest IPO in the history of the STAR Market.

One set of data comparison in the prospectus reads like two different companies.

From 2023 to 2024, net profit attributable to parent was -16.34 billion yuan and -7.15B yuan respectively. As of the end of 2025, accumulated uncovered losses reached 36.65 billion yuan.

In the first quarter of 2026, revenue was 50.8 billion yuan, a year-on-year increase of 719%, and net profit was 33 billion yuan, equivalent to earning nearly 400M yuan per day. Net operating cash flow for the single quarter was 42.57 billion yuan.

From abyss to fountain, only one cycle separates them.

The Scale of the Cycle and a Pair of Scissors

DRAM, commonly known as memory, is the chip body of the "memory stick" in phones and computers.

The CPU is the brain, the hard drive is the warehouse, and memory is the workbench. It forgets everything when power is off, but without it, nothing can run.

After years of fierce competition, Samsung, SK Hynix, and Micron together hold over 90% of the market share. A detail revealing a change in industry leadership is hidden in the prospectus: by 2025 sales, SK Hynix overtook Samsung for the first time with 34.48% vs. 33.96%. The leader has changed. CXMT ranks fourth globally and first in China with 7.67%, operating three 12-inch wafer fabs in Hefei and Beijing. Capacity utilization has climbed from 87.06% to 95.73%, nearing full capacity.

How brutal the cycle is: The prospectus cites Omdia data: from 2015 to 2025, the highest DRAM price was $7.89/GB, and the low point in the first half of 2023 was $1.78/GB, a difference of nearly 80%.

On CXMT's financial statements, in 2023, the unit price of DDR series products plummeted 46.61%, and the company recognized 11.5 billion yuan in inventory write-down losses for the year, exceeding the full-year revenue of 9.1 billion yuan. Inventory depreciation exceeded revenue from sales—that is what the bottom of a cycle looks like.

At the top, it’s a pair of open scissors.

On the selling price side, in 2025, the unit price of DDR series rose 61%, and LPDDR rose 24.46%. On the cost side, the unit cost of the two major product lines fell 26.26% and 22.85% respectively. Even the procurement side helped: the silicon wafer purchase price index fell from a base of 100 to 69.99, and chemicals fell to 73.72. Selling prices up, purchase prices down, and costs diluted—three forces working simultaneously. Gross margin went from negative 112.71% (pre-reversal) to 37.81%.

On a consolidated basis, CXMT's comprehensive gross margin in 2025 was 40.99%, surpassing Samsung's 39.38% and Micron's 39.79%, losing only to SK Hynix, which fully benefited from HBM dividends. A company that was deeply loss-making just two years ago has caught up with Samsung in gross margin—this is the most eye-catching data in the entire prospectus.

DDR4 Retreats, HBM Absent

In CXMT's product structure, there are two important signals.

The first signal is written in an inconspicuous paragraph in Section 5: Since the end of 2024, CXMT has stopped production of its own DDR4 products.

Over the past six months, global DDR4 spot prices have risen round after round. Many analysts attributed the cause to "CXMT expanding DDR4 production impacting the market."

The prospectus gives the opposite fact: it has already exited DDR4 and is fully betting on DDR5 and LPDDR5/5X. The effect is immediate: DDR series revenue jumped from 3.17 billion yuan in 2024 to 19.53 billion yuan in 2025, a 6.2x increase in one year, and its share rose from 13.26% to 31.87%. The driving force is the rapid ramp-up of high-price, high-margin DDR5. In the overall revenue, LPDDR for mobile phones still accounts for 66.43%. The top five customers account for 68% of revenue. End customers include Alibaba Cloud, ByteDance, Tencent, Lenovo, Xiaomi, OPPO, vivo, and others.

The second signal is the absence of one word: HBM does not appear anywhere in the full text.

Market rumors have long suggested CXMT is advancing HBM R&D, but the filing materials do not mention it at all. The 9 billion yuan forward-looking technology fundraising project is only described as "forward-looking technology research adapted to future advanced DRAM," with a construction period from 2026 to 2028. The high-bandwidth memory story for AI server supply—CXMT did not claim a single word in this legal document.

Incidentally, the prospectus's description of AI is similarly restrained. The original text admits that the company's revenue from AI-related fields during the reporting period was relatively low. What CXMT has absorbed is indirect dividends: the three overseas giants are shifting advanced capacity to HBM, withdrawing general DRAM supply and passively pushing up prices. CXMT's products happen to sit at the gap.

An Easily Overlooked Equity Chart

An equity detail: Of CXMT's three fabs, two are not truly "held" by the group.

For the Xinjiao fab operated by CXMT Xinjiao, the group directly holds only 30.68%. For the Beijing fab operated by CXMT Jidian, the direct stake is 31.72%. Both rely on voting rights agreements to reach 73% and 75% voting rights to achieve consolidation. Phase II of the Big Fund sits directly on the shareholder lists of these two subsidiaries, holding 26.99% and 24.67% respectively.

This structure explains the most glaring gap on the financial statements: In 2025, net profit was 7.14 billion yuan, but net profit attributable to parent was only 1.88B yuan. In Q1 2026, net profit was 33 billion yuan, of which parent attributable was 24.76 billion yuan. The bulk of the difference belongs to the minority shareholders of the two fabs. Investors subscribing to the IPO are buying parent-level equity attributable to the parent. When looking at the income statement, focus on the line for parent attributable net profit; don't be dazzled by the large total net profit figure.

The Anchor of the Issue Price, Hidden in the Arithmetic of Strategic Placement

Institutional forecasts of CXMT's post-listing market value range from 1 trillion to 4 trillion yuan, but the pricing anchor given by the prospectus itself is much more sober. Two simple divisions reveal it.

First: Planned fundraising of 29.5 billion yuan divided by 10k new shares corresponds to an issue price of about 4.4 yuan per share.

Second cross-check: Excluding employee asset management and sponsor follow-on investments, other strategic investors initially receive approximately 40k shares, with a subscription cap of 6.69B yuan, also corresponding to about 4.5 yuan per share.

Based on 4.4 yuan and a total share capital of 66.88 billion shares, the issue market value falls around 300 billion yuan. The issue is set at 300 billion, while the secondary market is shouting 1 trillion starting—the gap of more than double in between is the entire space for long-short battles after July 16, and also the source of expected new stock returns under the regulatory convention of "low-price issuance, giving profits to the secondary market."

The primary market timeline supports this anchor: In June 2025, Alibaba Cloud invested 6.1 billion yuan in CXMT at 2.6302 yuan per share, just 13 months before listing. On the founder's side, Chairman Zhu Yiming received 2.41B incentive shares at 0.108 yuan per registered capital, committing to distribute half of them to employees within ten years after listing, while his own shares are locked for 120 months from listing. A ten-year lock—rare in A-shares. The largest shareholder, Qinghui Jidian, promised that if after listing the net profit attributable to parent excluding non-recurring items declines by more than 50% compared to the year before listing, the lock-up period will automatically extend year by year.

Risks Also Written in the Financial Statements

The production lines supporting 40% gross margin also bear the heaviest burden on the income statement.

As of the end of 2025, the book value of fixed assets was 183 billion yuan, accounting for 54% of total assets. Depreciation in 2025 alone was 24.68 billion yuan, 2.3 times that of 2023, and will continue to increase after the fundraising projects are built. When prices rise, depreciation is diluted by profits; when prices fall, it becomes the main source of huge losses like in 2023.

Another number worth watching is the production-sales ratio: while capacity utilization keeps rising, the production-sales ratio dropped from 99.45% to 90.67%. In 2025, nearly 10% of output was not sold, turning into inventory. Hoarding inventory during a price hike cycle is smart business, provided prices continue to rise. The risk section of the prospectus is unambiguous, directly stating that the substantial year-on-year growth in the first half of 2026 may be unsustainable.

The industry's general expectation for this cyclical boom is to last until mid-2027.

For investors who press the subscription button on July 16, they are buying a ticket earned by China's memory industry after a ten-year long run. Everyone is curious how long this memory super cycle will last. But for now, this trillion-yuan giant ship has already set sail.