L&K(SH:603929) HTSC·2026-01-16 05:18Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 235.62 [1][4]. Core Views - The report highlights optimistic prospects for the cleanroom construction sector driven by significant capital expenditure plans from major semiconductor companies like TSMC, which plans to increase its capital expenditure by 27% to 37% year-on-year for FY26, reaching USD 52-56 billion [1][2]. - The demand for advanced semiconductor processes and storage chips is expected to lead to a surge in cleanroom construction, benefiting leading companies like the report's subject, which specializes in high-end electronic cleanroom engineering services [1][2]. - The company has shown strong revenue growth, with December 2025 revenue reaching TWD 95.01 billion (approximately RMB 20.98 billion), a year-on-year increase of 165.1% [2][3]. Summary by Sections Financial Performance - The company achieved a total revenue of TWD 767.39 billion (approximately RMB 169.43 billion) for the full year 2025, reflecting a year-on-year growth of 18.1% [2]. - For Q4 2025, the revenue was TWD 250.8 billion (approximately RMB 55.39 billion), marking a year-on-year increase of 133.7% and a quarter-on-quarter increase of 1.9% [2]. - The company’s net profit forecasts for 2025-2027 are adjusted to RMB 7.9 billion, RMB 12.0 billion, and RMB 13.6 billion respectively, with a CAGR of 28.9% [4]. Market Position and Expansion - The company is expanding its workforce, with the number of employees reaching 918 by the end of 2025, an increase of 131 from the previous year, indicating a strategic push for regional expansion [3]. - The report notes that the global semiconductor cleanroom market has significant regional barriers, and the company has been cultivating a workforce with international project experience, which positions it well for future growth in overseas markets [3]. Valuation Metrics - The report provides a valuation based on a PE ratio of 42x for FY26, leading to an updated target price of RMB 235.62, significantly higher than the previous target of RMB 95.4 [4]. - The company’s earnings per share (EPS) are projected to be RMB 3.71, RMB 5.61, and RMB 6.39 for 2025, 2026, and 2027 respectively [4][8].