CXMT Positioned for Overseas Growth Amid Rising Memory Prices
- CXMT’s global market share in memory chips is projected to increase to 14% next year, up from 9% last year.
- CLSA analysts assigned an 84.70 yuan ($12.64) price target for CXMT, anticipating over 60% growth.
- Bernstein reports indicate foreign demand may increase CXMT’s market share by over 10% in markets outside the U.S.
China’s CXMT, a major player in the memory chip sector, is expected to expand its footprint not only in its domestic market but internationally as well, according to analysts. CLSA’s report, released Thursday, reflects rising memory prices and a tightening global supply chain as factors that will facilitate CXMT’s overseas growth opportunities. They have initiated coverage of the Shanghai-listed company with an outperform rating.
Analysts predict that CXMT’s market share by bit shipment could rise from 9% last year to 14% in 2024, with a projected 12% market share by 2026. While the company is still outpaced by the top three global suppliers, CLSA highlighted CXMT’s rapid growth and increasing relevance in the industry. CLSA’s evaluation utilizes TSMC as a standard, citing that it illustrates the premium attributed to leading firms benefiting from technological advancements and consistent market demand.
The CLSA price target for CXMT stands at 84.70 yuan ($12.64), representing a potential increase of more than 60% from the stock’s closing price last Friday. On that day, the stock experienced a nearly 1% rise following a significant drop after a public holiday in mainland China.
In late September, Bernstein analysts also initiated coverage of CXMT, giving it an outperform rating and a price target of 70 yuan. Despite acknowledging risks stemming from U.S. restrictions affecting access to specific production tools, they recognized CXMT’s substantial advancements. Bernstein anticipates that foreign companies will integrate CXMT’s DRAM memory chips into products such as personal computers and consumer electronics sold outside the U.S., which could add over 10% to their global market share outside China and the U.S.
Additionally, the Bernstein report noted that CXMT already has the capacity to meet over 20% of global DRAM demand through the Chinese market, with many products manufactured in China ultimately being sold internationally. While some analysts express concerns that geopolitical issues might limit CXMT’s memory chip sales solely to China, Bernstein emphasized that Chinese original equipment manufacturers (OEMs) are likely to incorporate CXMT’s memory into their products for export. Furthermore, they noted that foreign PC, smartphone, and consumer goods manufacturers generally accept Chinese memory for global sales, with exceptions in sensitive U.S. markets.
Investor attention on CXMT comes as the company is set to announce its earnings on October 31. BNP Paribas analyst Alex Chang has forecasted a 22% increase in revenue for the September quarter compared to the prior quarter. Conversely, Samsung recently projected a 13% quarter-on-quarter revenue growth, although this news coincided with a downturn in its stock performance. BNP Paribas maintains a neutral rating on CXMT, with a price target of 48.70 yuan, suggesting that the stock may have already priced in most favorable scenarios.
News Courtesy of CNBC
