Core Viewpoint - The Integrated Circuit ETF (159546) opened at 1.930 yuan, experiencing a slight decline of 0.31% on October 31, 2023 [1] Group 1: ETF Performance - The performance of the Integrated Circuit ETF (159546) is benchmarked against the CSI All-Share Integrated Circuit Index return [1] - Since its establishment on October 11, 2023, the fund has achieved a return of 93.26%, while the return over the past month has been -3.63% [1] Group 2: Major Holdings - Key stocks within the Integrated Circuit ETF include: - SMIC (中芯国际) down 0.40% - Cambrian (寒武纪) down 0.99% - Haiguang Information (海光信息) down 0.08% - Lattice Technology (澜起科技) down 2.63% - GigaDevice (兆易创新) down 0.43% - Haowei Group (豪威集团) down 0.79% - Chipone (芯原股份) up 0.77% - JCET (长电科技) down 0.72% - Unisoc (紫光国微) down 0.15% - Tongfu Microelectronics (通富微电) down 2.06% [1]

Summary of Tongfu Microelectronics Conference Call Company Overview - **Company**: Tongfu Microelectronics - **Industry**: Semiconductor Packaging and Testing Financial Performance - **Revenue**: 201.6 billion CNY for the first three quarters of 2025, a year-on-year increase of 17.77% [2][3] - **Net Profit**: 7.78 billion CNY, up 43.69% year-on-year [2][3] - **Earnings Per Share**: 0.567 CNY, reflecting a 55.56% increase [2][3] - **Operating Cash Flow**: 54.66 billion CNY, a significant increase of 77.63% year-on-year, indicating improved operational efficiency [2][3] - **Third Quarter Performance**: Revenue reached 70.78 billion CNY and net profit was 4.48 billion CNY, both setting historical highs for the quarter [3] Comparative Performance - **Revenue Growth**: Tongfu Microelectronics' growth of 17.77% outpaced Longji Technology (14.78%) and was comparable to Huada Semiconductor (17.55%) [5] - **Net Profit Comparison**: Tongfu Microelectronics reported 8.60 billion CNY, while Longji Technology reported 9.54 billion CNY and Huada Semiconductor reported 5.43 billion CNY [5] - **Gross Margin**: Tongfu Microelectronics had a gross margin of 15.26%, higher than Longji Technology (13.74%) and Huada Semiconductor (12.34%) [5] Capacity Utilization and Future Outlook - **Capacity Utilization**: Increased from approximately 80% in Q1 to around 90% in Q3 for both main operations and joint ventures [6] - **Fourth Quarter Expectations**: Anticipated to maintain or slightly increase capacity utilization, with overall revenue expected to exceed the initial target of 26.5 billion CNY for the year [6][8] Capital Expenditure - **2025 Capital Expenditure**: 45 billion CNY spent in the first three quarters, with an expected total of 60 billion CNY for the year, primarily for capacity expansion [7] - **Future Revenue Contribution**: Most capital expenditures are expected to contribute to revenue in 2026 [7] Business Segmentation - **Revenue Breakdown**: High-performance computing accounts for 60-70% of total revenue, consumer electronics about 10%, automotive electronics around 5%, and memory and display driver chips each about 5% [4][10] - **Market Trends**: Strong demand in AI and related computing needs, with robust growth in domestic chip replacements and industrial sectors [10] Cost Management and Raw Material Impact - **Cost Control Measures**: Emphasis on refined management and efficiency improvements to manage expenses [11] - **Raw Material Price Stability**: Overall prices remain stable despite fluctuations in raw material costs, with strategies in place to mitigate impacts [12] Strategic Developments - **Ownership Changes**: Control has shifted to state-owned enterprise China Resources, but founders maintain operational control, ensuring continued support for long-term development [18][19] - **Investment in New Technologies**: Focus on power semiconductors and advanced packaging technologies to meet demands in AI data centers and high-performance computing [16] Conclusion - **Long-term Growth Strategy**: The company is positioned for stable growth through strategic investments and operational efficiencies, with a positive outlook for the remainder of 2025 and beyond [19]

Investment Rating - The report maintains a "Buy" rating for the company, indicating an expectation that the stock will outperform the market index by more than 15% in the next six months [1][8]. Core Insights - The company, Tongfu Microelectronics (002156.SZ), reported a revenue of 20.116 billion yuan for the first three quarters of 2025, representing a year-on-year growth of 17.77%. The net profit attributable to shareholders reached 860 million yuan, up 55.74% year-on-year [2][6]. - In Q3 2025, the company achieved a revenue of 7.078 billion yuan, a 17.94% increase year-on-year, and a net profit of 448 million yuan, which is a remarkable 95.08% increase year-on-year [6]. - The company's gross margin and net margin for the first three quarters of 2025 were 15.26% and 4.94%, respectively, both showing improvements compared to the same period last year [6]. - The company is a core packaging and testing supplier for AMD, benefiting from the growth in advanced packaging driven by AI applications. It provides comprehensive services across various sectors, including AI, high-performance computing, and 5G [6][8]. Financial Performance - The company has shown significant improvement in profitability, with Q3 2025 gross margin at 16.18%, up 1.54 percentage points year-on-year, and net margin at 7.19%, up 2.86 percentage points year-on-year [6]. - The report forecasts earnings per share of 0.80 yuan and 0.97 yuan for 2025 and 2026, respectively, with corresponding price-to-earnings ratios of 55 times and 45 times [8][10]. Capacity Expansion - The company is actively expanding its production capacity with multiple facilities in Jiangsu, Anhui, and Fujian, and has acquired stakes in AMD's facilities in Suzhou and Penang [6][8]. - The strategic acquisition of a 26% stake in Jinglong Technology is expected to enhance investment returns and provide stable financial benefits [8].

Core Viewpoint - Tongfu Microelectronics (002156.SZ) reported strong financial results for Q3 2025, with record revenue and profit, driven by industry recovery and growth in high-end products [1][2] Financial Performance - For the first three quarters, the company achieved revenue of 20.116 billion yuan, a year-on-year increase of 17.77%, and a net profit of 860 million yuan, up 55.74% [1] - In Q3 alone, net profit reached 448 million yuan, showing a year-on-year growth of 95.08% and a quarter-on-quarter increase of 13.05% [1] - Q3 revenue was 7.078 billion yuan, with a quarter-on-quarter growth rate slowing to 1.9% [1] Market Dynamics - The semiconductor packaging and testing industry is entering a stable growth phase, driven by demand from AI, high-performance computing, and 5G communications [2] - Tongfu Microelectronics' growth is attributed to increased revenue from high-end product lines, particularly from major client AMD [2] Operational Efficiency - The company reported a net cash flow from operating activities of 5.466 billion yuan, a year-on-year increase of 77.63% [3] - The expense ratio for Q3 was 9.28%, down 0.58 percentage points year-on-year, mainly due to a decrease in R&D expense ratio [3] - Investment cash flow showed a significant net outflow of 5.971 billion yuan, primarily due to fixed asset purchases [3] Shareholder Activity - The stock price surged over 56% in Q3, reaching a historical high of 47.99 yuan on October 10 [4] - Foreign investors, particularly through the Stock Connect program, increased their holdings, while domestic funds, including the National Integrated Circuit Industry Investment Fund, sold shares [4][5] - The divergence in shareholder actions reflects differing views on the company's future performance, especially in Q4 [5] Strategic Partnerships - Tongfu Microelectronics is the largest packaging supplier for AMD, accounting for over 80% of its orders [5] - AMD's strategic partnership with OpenAI, announced on October 6, is expected to influence future orders for Tongfu Microelectronics [5][6] Future Outlook - Analysts suggest that Tongfu Microelectronics is well-positioned to secure potential incremental orders due to its capacity and technological readiness [6] - However, competition in the AI chip market is intensifying, particularly with Qualcomm's recent entry [6] - The controlling shareholder, Huada Microelectronics Group, announced a plan to reduce its stake, which may impact market sentiment [6]

Investment Rating - The investment rating for the company is "Buy" (maintained) [5] Core Views - The industry is expected to maintain its prosperity, and the company's profits are entering a recovery phase [5] - The company reported a revenue of 20.116 billion yuan for the first three quarters of 2025, a year-on-year increase of 17.77%, and a net profit attributable to shareholders of 860 million yuan, up 55.74% year-on-year [7] - The company is benefiting from the rapid development of AI, the continuous transfer of packaging and testing capacity to domestic markets, and the advancement of industrial self-control processes [7] - The company's product structure has been optimized, with significant revenue growth from mid-to-high-end products, and internal management improvements have led to a decrease in expense ratios [7] - The company has a deep partnership with AMD, which is expected to benefit from AMD's AI business expansion [7] Financial Forecasts and Valuation - Revenue forecasts for the company are as follows: 22.269 billion yuan in 2023, 23.882 billion yuan in 2024, 26.925 billion yuan in 2025, 30.969 billion yuan in 2026, and 35.501 billion yuan in 2027, with corresponding growth rates of 3.92%, 7.24%, 12.74%, 15.02%, and 14.63% [6] - The net profit attributable to shareholders is projected to be 169 million yuan in 2023, 678 million yuan in 2024, 1.162 billion yuan in 2025, 1.595 billion yuan in 2026, and 2.025 billion yuan in 2027, with growth rates of -66.25%, 299.90%, 71.54%, 37.24%, and 26.93% respectively [6] - The price-to-earnings ratio (P/E) is expected to be 393.55 in 2023, 98.41 in 2024, 57.37 in 2025, 41.80 in 2026, and 32.93 in 2027 [6]

Investment Rating - The report assigns a "Buy" rating for the company, indicating a potential upside in the stock price [4][6]. Core Insights - The company achieved a revenue growth of 18% and a net profit growth of 95% in Q3 2025, with a non-GAAP net profit growth of 59%, leading the industry in performance [4][6]. - As a core packaging and testing manufacturer for AMD, the company is expected to benefit significantly from the growth of its major client, with projected net profits of 1.28 billion RMB, 1.88 billion RMB, and 2.71 billion RMB for 2025-2027, representing year-on-year growth rates of 89%, 47%, and 44% respectively [4][6]. - The stock is currently trading at a price-to-earnings (P/E) ratio of 48, 32, and 23 for the years 2025-2027, which supports the "Buy" rating [4][6]. Financial Performance Summary - For the first three quarters of 2025, the company reported revenues of 20.12 billion RMB, a year-on-year increase of 17.8%, and a net profit of 860 million RMB, a year-on-year increase of 55.7% [6]. - In Q3 2025 alone, the company achieved revenues of 7.08 billion RMB, a year-on-year increase of 17.9%, and a net profit of 450 million RMB, a year-on-year increase of 95.1% [6]. - The comprehensive gross margin for the first three quarters of 2025 was 15.3%, an increase of 0.9 percentage points compared to the same period last year [6]. Earnings Forecast - The company is expected to achieve net profits of 1.28 billion RMB, 1.88 billion RMB, and 2.71 billion RMB for the years 2025, 2026, and 2027, with corresponding EPS of 0.84 RMB, 1.24 RMB, and 1.79 RMB [5][6]. - The projected P/E ratios for the years 2025, 2026, and 2027 are 47.7, 32.4, and 22.5 respectively [5].

Investment Rating - The report maintains a "Buy" rating for Tongfu Microelectronics [6][4] Core Views - The company is expected to benefit from the ramp-up of mid-to-high-end products, driving revenue growth [1][2] - Strong collaboration with major clients and readiness in high-end capacity are anticipated to lead to increased orders and profit margin growth [1][3] Financial Performance Summary - In Q3 2025, the company achieved revenue of 7.078 billion RMB, representing a year-over-year increase of 17.94% and a quarter-over-quarter increase of 1.90% [1][2] - The net profit attributable to the parent company for Q3 2025 was 448 million RMB, up 95.08% year-over-year and 44.32% quarter-over-quarter [1][2] - For the first three quarters of 2025, total revenue reached 20.116 billion RMB, a year-over-year increase of 17.77%, with a net profit of 860 million RMB, up 55.74% year-over-year [1][6] Outlook Summary - The report highlights the potential for increased demand following AMD's significant orders, which could lead to revenue and profit margin growth for the company [3][4] - The company has completed the construction of new production lines and is prepared to meet future potential orders [3][4] Valuation Summary - The target price has been raised to 52.80 RMB, reflecting an adjustment in profit forecasts for 2025-2027 [4][6] - The report projects net profits of 1.342 billion RMB for 2025, with corresponding EPS of 0.88 RMB [4][9]

Core Viewpoint - The CPO concept stocks in the A-share market continue to show strong performance, with several companies reaching new historical highs in their stock prices [1]. Group 1: Stock Performance - LianTe Technology (301205) increased by 13.24%, with a total market value of 14.4 billion and a year-to-date increase of 46.78% [2]. - Jingwang Electronics (603228) hit the daily limit with a 10% increase, having a market value of 76 billion and a year-to-date increase of 184.10% [2]. - Dekeli (688205) rose by 8.89%, with a market value of 18.3 billion and a year-to-date increase of 66.20% [2]. - Yongding Co., Ltd. (600105) increased by 7.79%, with a market value of 23.7 billion and a year-to-date increase of 228.98% [2]. - Founder Technology (600601) rose by 6.84%, with a market value of 54.7 billion and a year-to-date increase of 191.80% [2]. - JepuTe (688025) increased by 4.16%, with a market value of 14.3 billion and a year-to-date increase of 218.53% [2]. - Zhongji Xuchuang (300308) rose by 3.98%, with a market value of 588 billion and a year-to-date increase of 330.63% [2]. - Xinyi Sheng (300502) increased by 3.66%, with a market value of 416.2 billion and a year-to-date increase of 409.25% [2]. - Cambridge Technology (603083) rose by 3.59%, with a market value of 41.3 billion and a year-to-date increase of 205.17% [2]. - Tianfu Communication (300394) increased by 3.22%, with a market value of 152.5 billion and a year-to-date increase of 203.14% [2]. - Sry New Materials (688102) rose by 2.60%, with a market value of 15.2 billion and a year-to-date increase of 125.09% [2]. - Tongfu Microelectronics (002156) increased by 2.18%, with a market value of 68.1 billion and a year-to-date increase of 52.21% [2]. Group 2: Historical Highs - Notable companies such as Founder Technology, Zhongji Xuchuang, Xinyi Sheng, and Sry New Materials have reached new historical highs in their stock prices [1].

Summary of TongFu Microelectronics (TFME) 3Q25 Earnings Call Company Overview - **Company**: TongFu Microelectronics (002156.SZ) - **Industry**: Semiconductor Packaging and Testing (OSAT) Key Financial Highlights - **3Q25 Revenue**: Rmb7.1 billion, an increase of 18% YoY and 2% QoQ, exceeding consensus estimates by 3% [1][2] - **Gross Profit Margin (GPM)**: Increased by 10 basis points QoQ to 16.2%, the highest level in over three years, surpassing the consensus of 15.0% [1][2] - **Operating Expenses (Opex)**: Stable at 7.6% of revenue [1] - **Net Profit**: Rmb448 million, beating Street and Citi estimates of Rmb363 million and Rmb430 million respectively [1][2] Demand Drivers - **Key Customer**: Strong demand from AMD, particularly in data center (EPYC), computing (Zen 5), and gaming sectors [1] - **Domestic Demand**: Increasing domestic demand for advanced packaging solutions [1][2] Capacity Utilization - **Current Utilization**: Estimated at full-loading (80%-85%) [1] - **Future Outlook**: Anticipation of continued solid revenue and earnings through 2025-1H26, with a focus on monitoring key customer revenue momentum [1] Industry Trends - **'China-for-China' Trend**: International customers are increasingly shifting back-end operations to Chinese OSATs for products sold in China [2] - **Capacity Expansion**: As Chinese OSATs approach full utilization, potential capacity expansion is being monitored, which could signal the second half of the OSAT up-cycle [2] Valuation and Risks - **Target Price**: Set at Rmb30 based on a 2.9x 2025E P/B, indicating a potential downside of 31.7% from the current price of Rmb43.94 [3][12] - **Key Risks**: 1. Market share loss at key customers due to exclusion of AI-related business [13] 2. Geopolitical tensions affecting overseas demand [13] 3. Falling utilization rates post-industry capacity expansion [13] 4. US export restrictions impacting supply of back-end equipment [13] Earnings Summary (2023-2027E) - **2023A Net Profit**: Rmb169 million, with a diluted EPS of Rmb0.111 [5] - **2024A Net Profit**: Rmb678 million, with a diluted EPS of Rmb0.447 [5] - **2025E Net Profit**: Rmb1,097 million, with a diluted EPS of Rmb0.723 [5] - **2026E Net Profit**: Rmb1,419 million, with a diluted EPS of Rmb0.935 [5] - **2027E Net Profit**: Rmb1,729 million, with a diluted EPS of Rmb1.140 [5] Conclusion - TongFu Microelectronics demonstrated strong performance in 3Q25, driven by robust demand from AMD and increasing domestic needs for advanced packaging. The company is well-positioned for continued growth, although it faces several risks that could impact future performance.

Market Overview - The three major indices opened lower, with the storage chip sector experiencing significant declines. As of the opening, the Shanghai Composite Index was at 3986.89 points, down 0.25%; the Shenzhen Component Index was at 13411.67 points, down 0.58%; and the ChiNext Index was at 3205.44 points, down 0.90% [1] Policy Developments - The Chinese Foreign Minister Wang Yi and U.S. Secretary of State Rubio discussed the importance of U.S.-China relations and the need for high-level interactions to send positive signals to the world [2] - The Chairman of the China Securities Regulatory Commission (CSRC), Wu Qing, announced plans to deepen reforms in the ChiNext board, aiming to establish listing standards that better align with the characteristics of innovative enterprises in emerging sectors [2] - The People's Bank of China (PBOC) Governor Pan Gongsheng indicated that the bond market is operating well and that the central bank will resume open market operations for government bonds [2] - The CSRC released opinions to enhance the protection of small investors in the capital market, including mechanisms to encourage long-term holding of new shares [3] - The CSRC also published a plan to optimize the Qualified Foreign Institutional Investor (QFII) system, aiming to attract more long-term foreign capital [3] Industry Updates - Domestic gasoline and diesel prices were reduced on October 27, with a decrease of 265 yuan per ton for gasoline and 255 yuan per ton for diesel, translating to a reduction of 0.21 yuan per liter for 92-octane gasoline [3] - Lingyi iTech announced that it has received over a hundred orders for complete machine assembly from major clients [4] - Zhenyu Technology plans to invest 2.11 billion yuan in a humanoid robot precision module and components project [5] - China Nuclear Engineering announced that its subsidiary signed a construction contract for the Haiyang Nuclear Power Units 5 and 6 [5] - Chang'an Automobile stated that it is developing a new energy unmanned intelligent vehicle in collaboration with JD.com [5] Financial Performance - EVE Energy announced a preliminary transfer price of 72.2 yuan per share, representing a 6.1% discount from the closing price [6] - Tongfu Microelectronics reported a 95.08% year-on-year increase in net profit for the third quarter [6] - Several companies, including Gaode Infrared and North Rare Earth, reported significant year-on-year profit growth, with increases of 1059% and 280% respectively [6][7] - Beijing Junzheng reported a 19.75% year-on-year decline in net profit for the third quarter [7] International Market Insights - The U.S. stock market saw all three major indices rise, with the Nasdaq up 1.86%, the S&P 500 up 1.23%, and the Dow Jones up 0.71% [8] - Qualcomm launched AI chips to compete with Nvidia in the data center market, with the AI200 and AI250 expected to be commercially available in 2026 and 2027 [8][10] - The S&P 500 companies reported that nearly 70% exceeded quarterly sales expectations, potentially marking the highest number of such companies in four years [10]