Nomura has initiated coverage on China's leading DRAM manufacturer, Cxmt Corporation (688825), on the day of its Shanghai Stock Exchange debut, issuing a "buy" rating and a 12-month price target of 116 yuan per share. This target implies a market capitalization of approximately 7.76 trillion yuan, equating to about $1 trillion, which is in line with the current valuation of U.S. rival Micron Technology (MU).

On July 27, the company's stock surged 531% in morning trading to 54.65 yuan, pushing its total market value past 3.6 trillion yuan. This leap allowed it to overtake Industrial and Commercial Bank of China as the largest company by market cap on the A-share market.

Key Drivers Behind the Aggressive Forecast

Nomura's research report highlights that the tight supply conditions in the memory chip market are unlikely to ease for several years. The investment bank projects that Cxmt's revenue and net profit attributable to shareholders will see compound annual growth rates of 63% and 74%, respectively, between fiscal years 2026 and 2028. This growth is expected to be fueled by capacity expansion, process node migration, and rising average selling prices (ASP).

The 116 yuan target is based on a projected earnings per share (EPS) of 5.8 yuan for fiscal year 2028, applying a target price-to-earnings (P/E) ratio of 20 times. The core of this valuation logic relies on a "dual premium" approach.

Valuation Strategy: A 'Dual Premium' Approach

First, Nomura uses Micron Technology as a comparable benchmark, noting that Micron's P/E ratio has ranged between 5 and 15 times over the past five years, with a median of about 10 times. Nomura predicts Cxmt will command a 2x premium over Micron's valuation, justifying the 20x P/E multiple. Second, the report cites a "China market valuation premium." By comparing semiconductor equipment companies listed in both the U.S. and China, Nomura observes that A-share markets typically grant higher multiples. As the sole publicly traded DRAM stock in China, Cxmt is seen as deserving an additional market premium.

Risk Factors Identified by Nomura

Nomura also outlines four key downside risks to its bullish thesis. These include a deterioration in end-market demand, intensifying competition from domestic peers like unlisted Yangtze Memory Technologies Corp. (YMTC), insufficient supply of integrated circuits and components such as CPUs, and an escalation in geopolitical tensions between the U.S. and China.