COUNTRY GARDEN (02007.HK) has fully exited its investment in Cxmt Corporation (688825.SH), the domestic DRAM memory chip leader, at its original entry price of 2 billion yuan. This move, which occurred in late 2024, came just before the company's spectacular IPO on the STAR Market, where it closed at 49.00 yuan per share on its first day, giving it a market capitalization of approximately 3.28 trillion yuan and making it the most valuable stock on the A-share market.
The decision to sell was driven by the developer's need to meet its public debt obligations and ensure the completion of its "guaranteed delivery" housing projects amid severe liquidity pressures, according to a source close to the company. The sale price of 2 billion yuan was the same amount COUNTRY GARDEN originally invested in Cxmt Corporation during the latter's Series B funding round in 2021.
The exit timing was particularly painful as it occurred at the bottom of the memory chip cycle, meaning the developer sold its stake just before the value skyrocketed. According to the IPO prospectus, COUNTRY GARDEN held a 1.56% stake in Cxmt Corporation through a subsidiary at the time of the sale. Based on the company's post-IPO market capitalization, that stake would now be worth approximately 49 billion yuan, representing a massive missed profit of over 46 billion yuan.
A source familiar with the matter revealed that COUNTRY GARDEN had established a venture capital division early on, but the team was forced to disband in 2021 as the company's liquidity crisis deepened. The source praised the team's investment acumen, noting that over 90% of their projects were profitable, with the worst-case scenario only resulting in a break-even exit.
Meanwhile, other investors in Cxmt Corporation have reaped enormous rewards. The Hefei state-owned capital system, which holds a combined 33.11% stake, now sees its holdings valued at nearly 1.09 trillion yuan. Alibaba, which invested a total of approximately 6.8 billion yuan, now holds a 4.48% stake worth over 147 billion yuan, representing a paper profit of nearly 140 billion yuan and a return of more than 20 times its initial investment.
Despite the public excitement surrounding the company's market debut, an employee of Cxmt Corporation was quoted as saying that regular staff are more concerned with their future salary and benefits than with the company's stock price performance.
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