CXMT Corp (688825.SS): 3Q26 nominal profit missed, but pricing/margin should be fine; OW

CXMT's preliminary 3Q26 revenue of Rmb117.2bn rose 18% QoQ and 604% YoY but was 7% below MSe, which we attribute to capacity constraints rather than price erosion. Attributable net profit of Rmb54.1bn was up 2% QoQ but 24% below MSe, and the stock fell 8%. We believe gross margin should remain at 2Q26's high level of about 87%, while the not-yet-disclosed consolidated profit is a better gauge of long-term profitability as incremental output comes from consolidated subsidiaries. The chairman proposed a Rmb1-2bn buyback. We remain Overweight with a Rmb88 target price (118% upside) and recommend buying on the dip, citing continued DRAM supply tightness and technology improvements.