CXMT set for historic Shanghai debut after $9.8 billion IPO
Investing.com — Chinese memory-chip maker CXMT Corp. could become the mainland’s most valuable listed company shortly after its Shanghai debut, following a heavily oversubscribed 66.6 billion yuan ($9.8 billion) initial public offering, Bloomberg reported.
CXMT sold 6.688 billion shares at 8.66 yuan each before the potential exercise of an overallotment option. The offering is China’s second-largest domestic IPO, trailing Agricultural Bank of China’s roughly $10 billion listing in 2010.
The share price values CXMT at about 580 billion yuan before trading begins. A first-day gain of around 330% would lift its market capitalisation above Industrial and Commercial Bank of China’s 2.6 trillion yuan, making CXMT the largest company listed in mainland China.
Newly listed shares are not subject to daily price limits during their first five trading sessions, leaving room for a sharp opening move.
Demand was led by individual investors, with the retail allocation oversubscribed 212 times. Around 9.4 million orders were submitted for shares worth 7.07 trillion yuan.
The company’s IPO valuation is also fueling expectations. CXMT was priced at about 2.4 times book value, a 56% discount to the average for global DRAM producers, including SK Hynix Inc (KS:000660), Micron Technology Inc (NASDAQ:MU), and Nanya Technology Corp (TW:2408).
CXMT is the world’s fourth-largest producer of dynamic random-access memory, which is used in smartphones, computers and artificial intelligence servers. The Hefei-based company is also developing high-bandwidth memory, a key component in AI data centres.
Its listing gives investors direct exposure to Beijing’s drive to expand domestic semiconductor production and reduce reliance on foreign chip suppliers.
Chinese AI-related IPOs have recorded large opening gains over the past year. Semiconductor-testing company Semight Instruments rose 876% on its debut in April, and chip designer Moore Threads gained 425% in December.
CXMT could become eligible for the Stock Connect programme during the third-quarter review in late August, with possible inclusion from mid-September. That would give eligible investors in Hong Kong broader access to the Shanghai-listed shares.
A strong debut could support planned listings from Yangtze Memory Technologies, Baidu Inc (NASDAQ:BIDU) Kunlunxin chip division and other Chinese technology companies.
Related articles
CXMT set for historic Shanghai debut after $9.8 billion IPO
Why this analyst calls Nike’s China pivot a high-stakes gamble
BofA lifts cybersecurity stock targets to reflect long-term growth outlook
