Puya Semiconductor (Shanghai) Co., Ltd. (688766.SH) disclosed its 2025 annual report alongside an asset acquisition announcement on March 22. The financial report revealed that the company achieved annual operating revenue of 2.32 billion yuan, a year-on-year increase of approximately 28.6%. However, net profit attributable to shareholders was 208 million yuan, a decrease of nearly 30% compared to the previous year, presenting a typical scenario of revenue growth without corresponding profit growth. During the reporting period, the company's gross profit margin fell by 5.19 percentage points year-on-year. Rising research and development, management, and sales expenses, coupled with inventory impairment losses resulting from a relatively aggressive stockpiling strategy, collectively eroded profits.
Simultaneously, Puya announced plans to acquire the remaining 49% equity stake in Zhuhai Noah Changtian Storage Technology Co., Ltd. for 247 million yuan. The acquisition will be funded through a combination of issuing shares, convertible bonds, and cash payments. This marks the company's third capital operation following transactions in March and November 2025. Upon completion, Noah Changtian will become a controlled subsidiary of Puya.
Against the backdrop of an AI-driven boom cycle in the memory chip industry, Puya's stock price has surged 376% over the past 10 months. However, its operational performance has not kept pace with the valuation increase, signaling an impending test of its fundamental business strength. As of the market close on March 23, Puya's stock price was 273.11 yuan, down 2.46%, with a total market capitalization of 40.4 billion yuan.
The annual report showed that gross profit margin faced pressure from two fronts. While revenue grew 28.6% to 2.32 billion yuan, this growth did not translate into higher profits. Net profit attributable to shareholders dropped from 292 million yuan in 2024 to 208 million yuan in 2025, a decline of 29.03%. Puya primarily engages in the design and sales of memory chips. Its main products include non-volatile memory chips such as NOR Flash, EEPROM, and SLC NAND Flash, along with derivative products like eMMC. These are mainly used in mobile phones, computers, network communications, home appliances, industrial control, and the Internet of Things.
Benefiting from strong industry demand trends in the memory chip market, the shipment volume of Puya's main memory chip products increased year-on-year. This, combined with market share gains for its MCU products and new analog products like Driver chips, drove the revenue growth. By product line, the memory chip series remains Puya's core business. This segment achieved revenue of 1.787 billion yuan during the reporting period, a 26.10% year-on-year increase, with a gross profit margin of 29.54%. Shipment volume reached 7.183 billion units, up 6.06%. The company's "Memory+" series, encompassing MCU chips and analog VCM Driver chips, generated revenue of 532 million yuan, a 37.91% year-on-year increase. However, the gross profit margin for this segment was 24.42%, down 5.21 percentage points year-on-year, with shipments of 1.463 billion units, a significant 68.18% increase.
The 5.19 percentage point decline in Puya's overall gross profit margin for 2025 was the primary reason for the profit contraction despite revenue growth. The company explained in its annual report that although market demand saw a concentrated release starting in the second quarter, leading to robust downstream demand, product prices faced significant pressure. This was due to differing price adjustment rhythms across the industry chain and changes in product mix, resulting in gross margin compression.
Rapidly growing expenses further squeezed Puya's profits. In 2025, R&D expenses reached 297 million yuan, up 22.86% from 242 million yuan in 2024. Management expenses increased from 58 million yuan to 89 million yuan, a sharp rise of 51.51%. Sales expenses also climbed from 57 million yuan to 85 million yuan, an increase of approximately 49.02%. Puya stated that it continues to increase R&D investment, with total employee compensation rising significantly due to an expanded workforce, particularly within the R&D team. Additionally, integration and operational costs associated with mergers and acquisitions aimed at expanding technology portfolios and market share contributed to the expense growth.
In the first half of the last year, Puya adopted a relatively aggressive inventory stocking strategy in response to supply and demand trends in emerging markets. The increased inventory levels reduced inventory turnover, and the associated inventory impairment burden also eroded net profit. According to the announcement, the company recognized an additional 84.9732 million yuan in inventory write-downs for 2025. The amount of asset impairment losses recognized during the period increased by approximately 62.5446 million yuan year-on-year. After reversing some provisions, the net impairment charge reduced the company's total pre-tax profit by 37.9433 million yuan.
The key question is whether this move can unlock new growth drivers. Concurrently with the annual report, Puya unveiled an asset acquisition plan to proceed with the full acquisition of Noah Changtian. According to the announcement, the company will acquire the 49% stake in Noah Changtian for 247 million yuan using a combination of shares, convertible bonds, and cash. Puya also plans to raise up to 77 million yuan by issuing shares to no more than 35 specific investors to fund the cash portion of the consideration, intermediary fees, and repay acquisition loans related to Noah Changtian.
This acquisition represents Puya's third move regarding Noah Changtian, following the acquisition of a 20% stake for 90 million yuan in March 2025 and a 31% stake for 144 million yuan in November 2025, which gave it controlling interest. If the current transaction is completed, Noah Changtian will become a wholly-owned subsidiary of Puya. The acquisition is also expected to generate 129 million yuan in new goodwill.
The primary operating entity within Noah Changtian is SHM (SkyHigh Memory Limited), which is the actual target asset of Puya's acquisition. SHM is a semiconductor company registered in Hong Kong. It was established in December 2018 with capital from SK hynix systemics Inc., a subsidiary of SK Hynix, indicating that SHM carries the "genes" of a major memory manufacturer. SHM's business focuses on 2D NAND and its derivative memory chip products (SLC NAND, eMMC, MCP) for the mid-to-high-end market. According to market research data from firms like TrendForce, SHM was the world's fourth-largest SLC NAND supplier in 2024, trailing only Kioxia, Micron Technology, and Winbond Electronics.
In terms of operational performance, Noah Changtian's primary revenue comes from overseas markets. In 2025, SHM's main business revenue reached 1.35 billion yuan, derived from sales of its core products including SLC NAND, eMMC, and MCP. Puya's existing product portfolio is primarily based on two types of non-volatile memory chips: NOR Flash and EEPROM. The target company's core products are SLC NAND and eMMC. Puya stated that this acquisition will allow it to further complete its non-volatile memory product layout, creating product complementarity, and build a more comprehensive global sales network. The transaction is still subject to approval by Puya's shareholders' meeting.
The phenomenon of stock prices outpacing fundamental performance is starkly evident in Puya's case. Over the past 10 months, the company's stock price has soared 376%, leading to a significant valuation re-rating largely attributed by the market to the AI-driven super-cycle in memory chips. Driven by emerging applications like AI large models, edge AI, and automotive electronics, the memory industry has entered a new upcycle, with sustained high景气度 (market prosperity). The market holds high expectations for the growth potential of memory chip companies.
However, the 2025 annual report indicates that the company's performance has not matched the stock price surge. The situation of rising revenue without corresponding profit growth highlights a clear disconnect between fundamentals and valuation. Investor expectations for improved performance at Puya may also hinge on the potential incremental growth from the 2D NAND products of SHM, which Puya will indirectly control through the full acquisition of Noah Changtian.
As this acquisition progresses, the effectiveness of Puya's integration of Noah Changtian, the pace of synergy realization, and the sustainability of the industry cycle in supporting earnings growth will be critical factors in testing the company's ability to deliver on the performance implied by its elevated stock price.
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