Citigroup: The strong performance of Lanqi Technology and share repurchases will help stabilize stock price fluctuations, maintaining a "buy" rating.

Citigroup released a research report stating that Lanqi Technology announced strong preliminary performance for the first half of 2026, with a net profit in the second quarter ranging from 10.53 billion to 12.53 billion yuan, a year-on-year growth of 66% to 98%, exceeding market expectations and the bank's expectations of 37% and 42%, mainly driven by higher revenue scale, gross margin expansion, and investment income. During the period, revenue increased by 33% year-on-year to 1.874 billion yuan, exceeding market and bank expectations by 6% and 11% respectively. Among them, revenue from interconnection chips increased by 28% year-on-year to 1.694 billion yuan. DDR5 RCD shipments continued to increase, with the proportion of Gen 3 and Gen 4 expanding further. The bank mentioned that although the news of Korean prosecutors conducting a sudden search of relevant offices on suspicion of price monopoly conspiracy led to a decline in the stock price, and the investigation is still ongoing and may cause further price fluctuations, the bank believes that the strong performance forecast for 2026, as well as the 3 billion to 6 billion yuan A-share buyback plan announced by management, should help stabilize the stock price. Citigroup stated that Lanqi Technology's H shares provide international investors with a rare opportunity to participate in the expansion of Chinese and global AI data centers, its strong AI theme favored by international investors has resulted in an premium of H shares over A shares. The bank's target price for its Hong Kong shares is set at HK$305, corresponding to a forecasted 2027 P/E ratio of 66 times, and maintains a "buy" rating.