Longsys Expects Up to 14.9 Billion Yuan Profit in First Three Quarters: Behind Nearly 20-Fold Profit Growth, the Memory Cycle Begins to Shift

Longsys expects a profit of up to 14.9 billion yuan in the first three quarters: behind nearly 20-fold profit growth, the memory cycle is beginning to shift gears

1. Longsys expects net profit of up to 14.9 billion yuan in the first three quarters, a year-on-year increase of nearly 20-fold, but the third-quarter single-quarter figure fell 30% to 50% quarter-on-quarter;

2. Putting together the three clues of the pace of price increases, inventory carryover, and AI demand points to the same judgment: the old cycle of the memory industry is stalling, and the new cycle has not yet fully ignited.

On the evening of October 15, major memory module maker Longsys delivered a rather dazzling earnings forecast: it expects revenue of 38 billion yuan to 40 billion yuan in the first three quarters of this year, a year-on-year increase of 127.08% to 139.03%; it expects net profit attributable to shareholders of 14 billion yuan to 14.9 billion yuan, a year-on-year increase of 1864.55% to 1990.84%; and net profit after deducting non-recurring gains and losses of 13.8 billion yuan to 14.8 billion yuan, a year-on-year increase of 2782.36% to 2991.23%.

But when net profit attributable to shareholders is spread across quarters, the shape looks different. It was 3.862 billion yuan in the first quarter and 6.715 billion yuan in the second quarter. Back-calculating from the forecast range, the third quarter alone comes to between 3.423 billion yuan and 4.323 billion yuan, down about 35.6% to 49.0% from the second quarter.

Therefore, although Longsys's cumulative net profit in the first three quarters of this year rose nearly 20-fold year-on-year, the market has traced a different curve. Its A-share stock price has fallen all the way from its high, closing at 244.00 yuan on October 15, down 6.14% for the day and about 67% from its high (749.88 yuan per share in July). The combination of peak earnings and a declining stock price usually means one thing: what the market is pricing is not past profit, but the future slope.

At present, wafers are the largest cost item for memory module makers. At the end of last year, Longsys had book inventory of 11.678 billion yuan; by the end of June this year, that figure had become 25.777 billion yuan, accounting for 60.12% of total assets.

A market signal worth watching is that TrendForce contract price data shows DRAM contract prices rose 90% to 95% quarter-on-quarter in the first quarter, narrowed to 58% to 63% in the second quarter, and were only 13% to 18% in the third quarter, with the market expecting 10% to 15% in the fourth quarter. Prices are rising, but is there still enough "fuel"?

Chart/DRAM contract price quarter-on-quarter increase narrows quarter by quarter

It should be noted that the excess profits of memory companies come precisely from the speed of price increases: once low-priced inventory is used up, newly purchased wafers are no longer cheap, and gross margins will return to the industry norm. The quarter-on-quarter decline in the third quarter is not an accident; it is the expiration date of this inventory mechanism. Longsys's statement in the announcement is also very direct: "The marginal contribution of memory price increases to the company's profitability has slowed significantly."

It is worth noting that the two markets are heading in two different directions. The consumer side is the first to buckle. Preliminary data from research firm Counterpoint shows that global smartphone shipments in the third quarter fell about 20% year on year, the worst third-quarter performance since 2012—surging memory costs have forced phone makers to raise prices, cut specifications and slash promotions, and consumers are choosing to delay replacing their phones. Another firm, IDC, paints an even gloomier preliminary picture: global smartphone shipments in the third quarter totaled 255.3 million units, down 22.0% year on year, the largest single-quarter decline on record, and it expects the market to resume growth only in 2027 at the earliest. The two firms' figures differ, but the reasons point to the same place: AI infrastructure buildout continues to squeeze memory chip supply, and consumer electronics are facing dual pressure on cost and supply.

In the first half of the year, Longsys's enterprise storage revenue was 2.140 billion yuan, up 208.80% year on year. In its earnings forecast, Longsys made a rare qualitative judgment: "The storage industry is shifting from a consumer price cycle to an AI-driven technology cycle." This sentence can be taken as the key theme of the entire announcement. Over the past two years, the valuation anchor for storage stocks was price-increase elasticity; going forward, it will be replaced by product capability.

Whether a storage company can navigate the bend smoothly can be answered from two accounts.

First, cash flow. In the first half of the year, net cash flow from operating activities was still -3.151 billion yuan; a large single-quarter net inflow in the third quarter filled the gap and turned it positive, and the debt-to-asset ratio at period end was pressed below 50%. For a company with more than 25 billion yuan in inventory, this is a harder indicator than profit: it means the goods were sold and the money was collected.

Second, products. UFS 4.1, mSSD and ePOP5x have entered large-scale commercial use, the two overseas brands Lexar and Zilia maintained high growth, and on-device AI technology cooperation has extended to AMD, Qualcomm and UNISOC. These arrangements may not immediately translate into revenue, but they determine which side of the next cycle the company stands on.

*This content is original to Jiwei.com, and the copyright belongs to Jiwei.com. Love Jiwei, love original content.

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Longsys Expects Up to 14.9 Billion Yuan Profit in First Three Quarters: Behind Nearly 20-Fold Profit Growth, the Memory Cycle Begins to Shift

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