Citi has issued a research report setting a target price of HK$305 for Montage Technology (HKEX: 06809) shares, implying a forecast 2027 price-to-earnings ratio of 66 times, while maintaining its 'Buy' rating.

The bank noted that the H-shares of Montage Technology offer international investors a rare opportunity to participate in the expansion of AI data centres in China and globally. Its strong AI theme has garnered favour from international investors, leading to a premium for its H-shares over its A-shares.

Montage Technology announced robust preliminary results for the first half of 2026. Its second-quarter net profit is estimated to be between RMB 1.053 billion and RMB 1.253 billion, representing year-on-year growth of 66% to 98%. This exceeded both the market consensus and Citi's own forecasts by 37% and 42% respectively, primarily driven by higher revenue scale, gross margin expansion, and investment gains.

Revenue for the period grew 33% year-on-year to RMB 1.874 billion, surpassing market and the bank's expectations by 6% and 11% respectively. Within this, interconnect chip revenue increased 28% year-on-year to RMB 1.694 billion. DDR5 RCD shipments continued to grow, with the proportion of Gen 3 and Gen 4 products expanding further.

The report acknowledged that news of South Korean prosecutors raiding related offices on suspicion of price-fixing collusion had led to a decline in the share price. The investigation is ongoing and could potentially cause further stock price volatility.

However, Citi believes the strong preliminary 2026 results, coupled with the management's announced plan to repurchase between RMB 300 million and RMB 600 million worth of A-shares, should help stabilise the share price.