Key Takeaways:
- BofA initiated Iluvatar CoreX at Buy with a RMB1,013 target price.
- The broker forecasts 145% revenue CAGR through 2028 for the GPGPU maker.
- Net profit is projected to swing to RMB2.3B by 2027 from a 2025 loss.
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BofA initiates Iluvatar CoreX at Buy with RMB1,013 target on AI localization
BofA Securities initiated coverage of Iluvatar CoreX at Buy with a RMB1,013 target price, betting China's AI localization drive will fuel growth.
The Shanghai-based GPGPU maker will benefit as Chinese buyers shift to domestic alternatives after US export controls blocked Nvidia's best chips, the BofA analyst team said in a July 10 note.
The broker forecasts revenue will compound at 145% annually from 2025 through 2028. Adjusted net profit is expected to swing from a RMB438 million loss this year to RMB18 million in 2026, then jump to RMB2.34 billion in 2027 and RMB5.44 billion in 2028, implying a net margin of 32.3%.
The bullish call comes as Iluvatar seeks to raise about $850 million, Bloomberg reported, riding a share price that has more than tripled since January. The company is in talks to sell ByteDance at least 50,000 chips this year, most for inference workloads.
The RMB1,013 target implies significant upside from the stock's last close of HK$110.80, which fell 18.7% on the day. Short selling accounted for 21% of turnover, exchange data show.
Iluvatar listed in Hong Kong six months ago, raising roughly $475 million. A new raise of $850 million would bring total public-market proceeds close to $1.3 billion. The company's TianGai-100 GPU line competes with Nvidia's A100 and A800, the parts Washington barred from China under export controls.
Revenue reached about 1 billion yuan ($148 million) last year, almost entirely from GPU sales. Winning ByteDance as a customer — the TikTok owner is in talks to buy at least 50,000 chips — would mark a breakout from the company's historical reliance on state buyers.
The initiation by a bulge-bracket bank adds institutional credibility to a stock that has already tripled this year. Investors will watch for the ByteDance deal's final terms and the outcome of the $850 million capital raise, both potential catalysts for the next leg.
This article is for informational purposes only and does not constitute investment advice.
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