Summary of Montage (688008.SS) Conference Call Company Overview - **Company**: Montage (688008.SS) - **Industry**: High-speed interconnection integrated circuits (ICs) Key Points Growth Drivers - **AI Demand**: Anticipated growth in demand for high-speed interconnection chips driven by AI applications, as data transmission bottlenecks in AI server systems become critical [1][32] - **Product Line Expansion**: Montage is expected to launch a rich product line including MRDIMM, CKD, and PCIe Retimer in the near term, with PCIe Switch/CXL controller in the medium to long term [1] - **Revenue Contribution**: Revenue from DDR5 is projected to increase from 19% in 2022 to 70% in 2025E, while new interconnect chips are expected to grow from 19% in 2025E to 69% by 2030E [32] Financial Performance - **Sales Growth**: Montage's DDR5 Gen3 RCD chip sales surpassed Gen2 in 3Q25, and DDR5 Gen4 RCD chip has started mass shipments [2] - **Revenue Projections**: Revenue estimates for 2025E are Rmb5,733 million, with projections of Rmb8,580 million for 2026E and Rmb11,241 million for 2027E [14] - **Gross Margin Improvement**: Gross margin is expected to improve from 61.7% in 2025E to 62.5% in 2027E, driven by higher contributions from high-end products [13] Product Innovations - **New Product Revenue**: Innovative products like PCIe retimer, MRCD/MDB, and CKD generated Rmb294 million in 1H25, accounting for 10% of total revenues [3] - **Market Penetration**: MRCD/MDB is expected to see accelerating market penetration in 2026-27E, with significant orders already in hand [7] - **CXL MXC Chips**: Montage is a technology leader in CXL, with applications already in use by major companies like Samsung and SK Hynix [8] Valuation and Target Price - **Target Price Increase**: The 12-month target price has been raised to Rmb200, based on a 31x discounted P/E for 2030E [1][35] - **Valuation Methodology**: The valuation methodology has shifted to a discounted P/E to better capture long-term growth potential [16] Risks and Challenges - **Market Growth Risks**: Potential risks include weaker-than-expected growth in the memory interface IC market and slower new product introductions [35] - **Competition**: Increased competition in the interconnect chip market could impact Montage's market share and pricing power [35] Conclusion - **Investment Thesis**: Montage is positioned for strong growth driven by AI demand and innovative product launches, with a favorable valuation compared to peers. The stock is currently rated as a Buy with a significant upside potential [32][36]

E s s e n t i a l s | 05 Jan 2026 16:00:18 ET │ 47 pages | Earnings Summary | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | | Year to | Net Profit | Diluted EPS | EPS growth | P/E | P/B | ROE | Yield | | 31 Dec | (RmbM) | (Rmb) | (%) | (x) | (x) | (%) | (%) | | 2023A | 451 | 0.396 | -65.4 | na | 14.3 | 4.5 | 0.2 | | 2024A | 1,412 | 1.235 | 211.8 | 103.4 | 12.8 | 13.1 | 0.2 | | 2025E | 2,242 | 1.958 | 58.5 | 65.2 | 11.4 | 18.5 | 0.3 | | 2026E | 3,248 | 2.837 | 44.9 | 45.0 | 9.5 | 23.0 | 0.5 ...

Group 1 - The semiconductor industry is experiencing a renewed wave of companies seeking to list in Hong Kong, with major players like OmniVision, GigaDevice, and Unisoc submitting applications or announcing hearing approvals in December [1] - The global memory interconnect chip leader, Montage Technology, is advancing its Hong Kong listing process, having received approval from the China Securities Regulatory Commission and completed the Hong Kong Stock Exchange hearing review [3] - Montage Technology is a fabless integrated circuit design company focused on interconnect solutions for cloud computing and AI infrastructure, holding a 36.8% market share in the global memory interconnect chip market as of 2024 [3] Group 2 - The AI-driven demand is significantly boosting the storage industry, with Gartner predicting global generative AI spending to reach $644 billion by 2025, a 76.4% increase from 2024 [4] - The NAND Flash prices have surged approximately 246% since the beginning of Q1 2025, with 70% of this increase occurring in the last 60 days [4] - The global memory interconnect chip market is projected to grow from $1.2 billion to $5 billion between 2024 and 2030, with a compound annual growth rate (CAGR) of 27.4% [4] Group 3 - Montage Technology reported impressive performance in the first three quarters of 2025, achieving revenue of 4.058 billion yuan, a year-on-year increase of 57.83%, and a net profit of 1.632 billion yuan, up 66.89% [4] - The company's gross margin for the first three quarters reached 61.46%, an increase of 3.34 percentage points compared to the same period last year [4] - The business consists of interconnect chips and server platform products, with interconnect chips being the core growth driver, serving major clients like Samsung, SK Hynix, and Micron [5]

Core Viewpoint - 澜起科技 has submitted its listing application to the Hong Kong Stock Exchange, aiming to capitalize on its position as the largest memory interconnect chip supplier globally, with a projected market share of 36.8% in 2024 [1][3]. Company Overview - 澜起科技 is a leading fabless integrated circuit design company focused on providing innovative, reliable, and high-efficiency interconnect solutions for cloud computing and AI infrastructure [3][4]. - The product portfolio includes memory interface chips and high-performance interconnect chips, addressing interconnect bottlenecks while enhancing data transmission speed, reliability, and energy efficiency [3][4]. Product Lines - The company offers a full range of DDR2 to DDR5 memory interface chips and supporting chips, including Serial Presence Detect (SPD), temperature sensors (TS), and power management integrated circuits (PMIC) [3][4]. - The DDR5 memory interface chips serve as critical interconnect components between CPUs and DRAM modules in servers, enabling stable high-speed data transmission [3][4]. - New interconnect chips such as MRCD/MDB, CKD (clock driver), PCIe Retimer, and CXL MXC (memory expansion controller) are designed to enhance data transmission reliability and efficiency in AI servers and personal computers [3][4]. Market Potential - The memory interconnect chip market is expected to grow significantly from $1.2 billion in 2024 to $5 billion by 2030, with a compound annual growth rate (CAGR) of 27.4% [6]. - The PCIe and CXL interconnect chip market is projected to increase from $2.3 billion in 2024 to $9.5 billion by 2030, with a CAGR of 26.7% [6]. Financial Performance - For the fiscal years 2022, 2023, and projected figures for 2024 and 2025, 澜起科技 reported revenues of approximately RMB 3.67 billion, RMB 2.29 billion, RMB 3.64 billion, and RMB 1.22 billion respectively [6][7]. - The net profit for the same periods was approximately RMB 1.30 billion, RMB 0.45 billion, RMB 1.34 billion, and RMB 0.50 billion respectively [6][7].

Overview - The announcement details a capital increase and related party transaction involving the company's subsidiary, Hengqin Company, to support its operational development [1][2]. Capital Increase Details - Hengqin Company plans to increase its registered capital from RMB 100 million to RMB 133.5 million, with an additional capital of RMB 33.5 million [1][4]. - The total capital increase from all parties amounts to RMB 100.5 million, with Shanghai Chengxi Mosuo Enterprise Management Partnership contributing RMB 60.3 million and the company contributing RMB 40.2 million [1][5]. Related Party Transaction - The transaction is classified as a related party transaction due to the involvement of shareholders ALBERTI and XI YU, which are controlled by the company's executives [2][3]. - The transaction does not constitute a major asset restructuring as defined by regulations [1][4]. Financial Position of Hengqin Company - As of December 31, 2024, Hengqin Company had total assets of RMB 149.83 million and a net asset of -RMB 49.99 million. By March 31, 2025, total assets increased to RMB 192.83 million, with net assets at -RMB 88.20 million [2][6]. Shareholding Structure Post-Investment - After the capital increase, the company's shareholding in Hengqin will decrease from 51.00% to 48.24%, but it will still maintain control over the board [6][7]. Approval Process - The capital increase was approved by the company's board of directors and independent directors, ensuring compliance with legal and regulatory requirements [7][8].