Chinese memory semiconductor company Changxin Memory Technologies (CXMT) listed on the Shanghai Stock Exchange on the 28th, marking Asia's largest initial public offering (IPO) of the year.

Attention focused on how CXMT, which received recognition for an enterprise value of approximately $85.5 billion (approximately 125.24 trillion won), would be evaluated by the market amid recent adjustments in technology stocks.

This listing is expected to serve as a test case for gauging investment sentiment in China's leading semiconductor companies as capital continues to shift between growth and defensive stocks alongside adjustments in artificial intelligence (AI) related stocks.

▲Enterprise Value of $85.5 Billion...Among the Top Tier of Chinese Semiconductor Listed Companies

According to Reuters on the 27th (local time), CXMT raised 57.92 billion yuan (approximately $8.559 billion) by offering 5.792 billion shares at 8.66 yuan per share.

If all overallotment options (greenshoe) are exercised, the fundraising scale is expected to expand to 66.61 billion yuan.

Based on the offering price, the enterprise value was valued at approximately 579 billion yuan (approximately $85.563 billion).

Accordingly, CXMT has established itself as one of the largest semiconductor companies listed on Chinese stock exchanges.

▲Tradable Shares of 6.73%...Possibility of Increased Volatility in Early Listing

At the time of listing, only 6.73% of the total expanded issued shares were actually tradable in the market.

Most existing shares were subject to lock-up restrictions, limiting their circulation.

The market analyzed that limited tradable shares could increase stock price volatility in the early stages of listing and significantly increase trading volumes.

▲IPO Absorbs Market Liquidity...Short-term Burden Followed by Potential Rebound

Through a report, HSBC Qianhai Securities forecasted that this large-scale IPO could absorb some liquidity in the Chinese stock market before and after listing.

However, based on past cases of large-cap technology stock listings, the market has shown a rebound trend starting from the day after listing, so the short-term impact may be limited, it assessed.

CTMT Logo [Reuters/Yonhapnews]

▲World's 4th Largest DRAM Manufacturer Following Samsung and SK Hynix

CXMT is a company that manufactures DRAM (Dynamic Random Access Memory) semiconductors used in smartphones, PCs, servers, and other devices.

It is currently evaluated as the world's fourth-largest DRAM manufacturer, following Samsung Electronics, SK Hynix, and Micron.

This IPO surpassed the $7.5 billion scale offering by SMIC on the Shanghai Stock Exchange in 2020, setting a new record for the largest listing by a mainland Chinese semiconductor company.

▲Expected to Benefit from Growing AI Demand...Technology Gap Identified as Challenge

Through a report, Morningstar analyst Jing Zewei analyzed that CXMT is likely to directly benefit from expanded memory demand resulting from China's growing AI industry.

However, as technology gaps with global leaders such as Samsung Electronics and SK Hynix still exist, there may be constraints on market share expansion in the high-performance memory market for AI servers, he diagnosed.

In its prospectus, CXMT evaluated that expanding AI demand has recently led to recovery in DRAM market conditions.

However, it cautioned that if the pace of AI investment growth slows in the future or competitors' supply expansion proceeds faster than expected, the memory market could shift to weakness again.

▲First Half Revenue Expected to Increase More Than Sevenfold...Profit Turnaround Projected

The company projected that revenue for the first half of this year will reach 110 billion to 120 billion yuan, more than seven times higher than the same period last year.

Net profit is also expected to record 66 billion to 75 billion yuan, achieving a major shift from losses in the same period last year to significant profitability. This was analyzed as a result of expanded memory demand centered on AI and improved market conditions driving earnings recovery.