Bernstein: ChangXin Technology’s third-quarter revenue rose 19% quarter on quarter. Why did profit attributable to shareholders rise only 3%?

Where did the third-quarter growth gap appear?

ChangXin Technology reported revenue of 118.714 billion yuan in the third quarter of 2026, up 19.3% quarter on quarter; operating profit was 99.039 billion yuan, up 21.2% quarter on quarter. Net profit attributable to shareholders was 54.435 billion yuan, up just 3% quarter on quarter, while basic earnings per share fell from 0.88 yuan to 0.85 yuan.
Revenue was 10.2% below Bernstein’s own forecast but 1.1% above market consensus; net profit attributable to shareholders was 30.4% below the firm’s forecast and broadly in line with consensus, while basic earnings per share was 9.2% below consensus.

Bernstein noted that the parent company holds lower stakes in Jidian and Xinqiao, the two wafer fabs where profit grew more rapidly, so more profit is attributable to minority shareholders. Minority shareholders’ share of consolidated net profit rose from 43% in the second quarter to 63% in the third.
The company increased its stake in Jidian in August 2026. Bernstein believes the slowdown in growth of profit attributable to shareholders does not mean the company’s underlying profitability is weakening at the same pace: third-quarter gross margin was 89.5% and operating margin was 83.4%, both comparable to peers’ levels.

The company expects growth in both the fourth quarter of 2026 and the full year of 2027, supported by strong demand, persistent supply shortages, an improved product mix and market share gains. Prices for enterprise customer products rose more sharply, while consumer products also saw smaller price increases; the company provided no specific price or shipment guidance.
Bernstein believes the company’s third-quarter sequential revenue growth was slightly slower than peers’, but its overall growth trajectory remains steeper when the faster growth of the preceding quarters is included. The company is discussing long-term agreements with customers, improving demand visibility, but has not disclosed agreement details.

The 4F² architecture will be used alongside wafer bonding technology for G6, laying the groundwork for subsequent product generations. The company plans to send samples to customers at the end of 2026; the scale of deployment depends on customer acceptance and market demand. The company views 4F² and LPDDR6 as longer-term directions, and near-term margins may be unaffected.
Capacity expansion remains the priority for the use of funds, and depreciation is expected to follow a trend similar to capital expenditure; the board also approved a share buyback of 1 billion to 2 billion yuan. Bernstein maintained its Outperform rating and 70 yuan price target, noting that difficulties obtaining equipment, greater-than-expected expansion in global DRAM supply and a significant slowdown in AI-related demand could affect its assessment.