24 December 2025 | 9:05AM HKT Equity Research Kematek (301611.SZ): Ceramic heaters to ramp up ahead with capacity expansion; TP raised to Rmb87.7; Buy We are constructive on Kematek's expansion from ceramic components to ceramic heaters and electrostatic chucks, riding on China WFE expansion and supply chain diversification. Kematek announced its plan to raise Rmb750m through issuing convertible bond to fund its capacity expansion plan for ceramic heaters, electrostatic chucks, and ultra-high-purity SiC com ...

Summary of OmniVision (603501.SS) Conference Call Company Overview - **Company**: OmniVision (formerly known as Will Semi) - **Industry**: Automotive and smartphone Camera Image Sensors (CIS) Key Points Financial Performance - **3Q25 Revenue**: Rmb7.8 billion, up 15% YoY, but below estimates by 10% and Bloomberg consensus by 6% [3][4] - **Gross Margin**: 30.3%, in line with expectations [3][4] - **Operating Profit**: Increased by 21% YoY [3] - **Net Income**: Rmb1.4 billion, 12% below estimates [3] Product Development - **Automotive CIS Expansion**: Launched new 8Mpx automotive CIS product (OX08D20) for ADAS/AD systems in October 2025, featuring compact size and lower power consumption [2] - **In-Cabin Monitoring**: Released new 5Mpx HDR sensor for Driving Monitoring System (DMS), improving algorithm accuracy in extreme conditions [2] Market Outlook - **Smartphone CIS Recovery**: Anticipated sequential recovery in smartphone CIS growth in 2H25 due to new product launches [1] - **High-End Product Mix**: Positive outlook on the shift towards high-end smartphone CIS and increased automotive CIS contributions for smart driving features [1] Earnings Revision - **Earnings Forecast**: Revised down by 8% for 2025-27E due to lower smartphone CIS demand, but gross margin expectations were slightly increased [4][9] - **Target Price**: Updated to Rmb186.3, based on a 33x target 2026E P/E multiple [9][14] Risks - **Potential Risks**: 1. Slower new product expansion and product mix improvement in smartphone CIS [15] 2. Weaker-than-expected demand in the China smartphone market [15] 3. Trade tensions impacting business [15] Valuation Metrics - **Market Cap**: Rmb164.4 billion / $23.2 billion [15] - **EPS Forecast**: Expected to be Rmb3.71 in 2025E, down from previous estimates [9][15] Conclusion - **Investment Recommendation**: Maintain Buy rating based on long-term growth potential and product mix improvements [1][14]

Summary of JCET (600584.SS) 3Q25 Earnings Call Company Overview - **Company**: JCET (Jiangsu Changjiang Electronics Technology Co., Ltd.) - **Industry**: Semiconductor packaging and testing services - **Period**: 3Q25 Key Financial Highlights - **Revenue**: Rmb10 billion, up 6% YoY and 9% QoQ, but 6% below estimates [1][2] - **Gross Profit**: Rmb1.434 billion, with a gross margin of 14.3%, reflecting a 2 percentage point increase YoY [3] - **Operating Income**: Rmb508 million, with an operating margin of 5.0% [3] - **Net Income**: Rmb483 million, showing a strong recovery with 6% YoY growth and 81% QoQ growth [2][3] - **R&D Expenses**: Remained high, indicating a strategic shift towards high-value-added business [1][2] Segment Performance - **Segment Growth**: - Computing: +69.5% YoY - Industrial: +40.7% YoY - Medical: +31.3% YoY - Automotive: Significant growth noted [1] Management Insights - **Utilization Rate**: Continuous recovery observed in utilization rates, particularly in Wafer-Level Packaging (WLP), power devices, and Power Management Integrated Circuit (PMIC) packaging [1] - **Product Mix Upgrade**: Transitioning from consumer electronics to higher-value segments such as computing, industrial, automotive, and medical products [2] - **Long-term Outlook**: Positive outlook due to market leadership in OSAT (Outsourced Semiconductor Assembly and Test) in China and ongoing product mix upgrades [1] Earnings Revisions - **2025E Net Income**: Revised down by 9% due to lower-than-expected revenues and higher operating expenses [7] - **2025E Revenue**: Adjusted to Rmb40.639 billion, a 4% decrease from previous estimates [8] - **2026E and 2027E Estimates**: Largely unchanged [7] Valuation and Price Target - **Target Price**: Maintained at Rmb44.9, based on a target P/E of 26.5x for 2026E earnings [1][14] - **Current Trading P/E**: 23.5x for 2026E, indicating modest upside potential [1] Risks and Considerations - **Key Risks**: - Variability in semiconductor capital expenditure in China - Uncertainty in technology development timelines - Fluctuations in shipments of advanced packaging [15] Conclusion - JCET's 3Q25 results reflect a solid recovery in net income and revenue growth, driven by strategic shifts in product focus and improved utilization rates. The company maintains a neutral rating with a stable price target, while potential risks remain in the semiconductor market landscape.

Summary of Zhejiang Dingli Co Ltd. Conference Call Company Overview - **Company**: Zhejiang Dingli Co Ltd. (603338.SS) - **Industry**: Aerial Working Platforms (AWP) Key Points from the Conference Call 1. Sales Performance - **US Sales**: Stable year-over-year (flat yoy) in 1H25 despite US-China tariff escalation in April, with a temporary suspension of shipments for 1-2 months [1][6] - **EU Sales**: Relatively soft in 1H25 due to a high comparison base from the previous year, as shipments were front-loaded ahead of EU anti-dumping rulings [6] - **Emerging Markets**: Robust growth in non-US/Europe markets, with a double-digit percentage increase year-over-year in 1H25, contributing 25% to total sales [6] - **Domestic Sales**: Approximately 30% decline year-over-year in 1H25, primarily due to weak demand from large rental customers, although small-to-medium-sized customers saw a 20% increase in sales [7] 2. Profitability and Margins - **Gross Profit Margin (GPM)**: Declined by 0.8 percentage points year-over-year in 2Q25, attributed to a change in product mix and the impact of higher tariffs [8] 3. Tariff and Pricing Strategy - **Current Tariffs**: Dingli faces a 79% tariff in the US, which includes 24% anti-dumping/subsidy duties and 55% tariffs, approximately 10 percentage points higher than the previous year [10] - **Pricing Strategy**: Management indicated that they do not plan to pass on the additional tariffs this year but may negotiate prices for next year based on tariff clarity [10] 4. Market Outlook - **US Market**: Demand for AWP remains solid, with expectations of flat sales year-over-year in 2025. Current inventory levels are sufficient to support sales until year-end [10] - **EU Market**: Anticipated improvement in sales in 2H25 due to a low comparison base and ramp-up of high-end new products, with expectations for positive full-year growth [10] - **Capacity Expansion**: Plans for overseas capacity expansion are contingent on tariff changes [10] 5. Investment Thesis - **Long-term Potential**: The company is well-positioned in the under-penetrated Chinese AWP market, driven by rising labor costs, a construction worker shortage, and increasing safety awareness [13] - **Product Differentiation**: Focus on higher-ASP boom lifts and electrification technology, which provides a competitive edge [13][14] 6. Risks - **Key Risks**: Include weaker-than-expected global construction activities, intensifying competition in the AWP market, and potential escalations in US-China trade tensions that could lead to unfavorable tariffs [12] 7. Valuation - **Price Target**: The 12-month target price is set at Rmb64.0, reflecting a 10.0X 2026E DACF multiple, which is below the 3-year average due to uncertainties in global trade [11] 8. Financial Projections - **Revenue Growth**: Projected revenues for 2025E are Rmb8,949.4 million, with a core EPS CAGR of approximately 15% from 2025E to 2027E [16] Additional Insights - **Market Share**: Dingli has gained market share in the EU due to favorable anti-dumping duties compared to peers [10] - **Operational Resilience**: The company has demonstrated resilience under high-tariff environments, optimizing the competitive landscape against domestic peers [14]

Summary of Luxshare's 2Q25 Results and 3Q25 Guidance Company Overview - **Company**: Luxshare Precision Industry Co., Ltd. (002475.SZ) - **Industry**: Electronics manufacturing, specifically focusing on telecom and automotive electronics Key Points from 2Q25 Results - **Revenue Performance**: - 2Q25 revenue reached Rmb62.7 billion, up 23% YoY and 2% QoQ, exceeding estimates by 4% [3] - **Net Income**: - Net income for 2Q25 was Rmb3.6 billion, reflecting an 18% QoQ increase and a 23% YoY increase, aligning with company guidance and consensus estimates [3] - **Gross Margin**: - Gross margin improved to 12.0%, higher than the estimated 11.3%, indicating a shift towards higher-margin products and improved production efficiency [3] - **Operating Expenses**: - Operating expense ratio increased to 7.4% from 6.6% in 1Q25 due to higher R&D and administrative expenses [3] 3Q25 Guidance - **Net Income Projection**: - Guidance for 3Q25 net income is projected to grow between 15% to 28% YoY, with a midpoint estimate of Rmb4.5 billion, which is 5% above Bloomberg consensus but 10% below previous estimates [2] - **Revenue Expectations**: - Revenue for 3Q25 is expected to grow by 12% YoY, with net income projected at Rmb4.7 billion, reflecting a 27% YoY increase [2] Market Position and Growth Drivers - **Market Share Gains**: - Luxshare is gaining market share in the iPhone segment, supported by upcoming form factor changes that are expected to drive demand [1] - **Diversification**: - The company's expansion into non-smartphone markets, particularly in telecom and automotive electronics, is a key driver for long-term growth, with revenues in these segments growing by 49% YoY and 82% YoY in 1H25 [1][3] - **Production Efficiency**: - Enhanced production efficiency is contributing to improved profitability, with expectations for continued improvement in gross margins through 2026-27E [8] Financial Projections and Valuation - **Earnings Revisions**: - Adjustments to net income estimates for 2025-27E reflect a 2% increase for 2025, with expectations for higher gross margins and increased R&D investments [8] - **Target Price**: - The target price has been raised to Rmb50.15, based on a 15.4x P/E multiple for 2026E, indicating a 14.7% increase from previous estimates [11][15] Risks and Considerations - **Market Demand Risks**: - Potential risks include slower-than-expected demand for AirPods and weaker performance in the Apple Watch assembly business [16] - **Operational Risks**: - Higher-than-expected operating expenses and foreign exchange risks due to significant exposure to US customers (93% of revenues in USD) could negatively impact performance [16] Conclusion - **Investment Recommendation**: - The outlook for Luxshare remains positive, with a "Buy" rating maintained, supported by strong revenue growth, market share gains, and diversification into high-growth segments [1][11]

Summary of Hikvision Conference Call Company Overview - **Company**: Hikvision (002415.SZ) - **Industry**: Security and Surveillance Technology Key Points Financial Performance - **3Q25 Revenue Growth**: Expected to grow by 14% YoY to Rmb2.7 billion, a significant improvement from 2Q25 which showed 0% growth YoY [1] - **2Q25 Revenue**: Reported at Rmb23 billion, which was 6% and 8% below estimates from Goldman Sachs and Bloomberg consensus respectively [2] - **1H25 Performance**: Innovative business grew by 14% YoY, overseas business by 7% YoY, while China PBG and EBG showed muted growth at -2% and -0% YoY respectively, and SMB declined by 30% YoY [2] - **Net Income for 2Q25**: Increased by 15% YoY to Rmb3.6 billion, exceeding estimates by 6% [2] Margins and Operational Efficiency - **Gross Margin (GM)**: Improved to 45.4% in 2Q25 from 44.5% in 2Q24, attributed to a better product mix [2] - **Operating Expense (Opex) Ratio**: Decreased to 30.2% in 2Q25 from 32.9% in 1Q25, indicating improved operational efficiency [2] - **Net Margin (NM)**: Increased to 15.5% in 2Q25 from 13.5% in 2Q24 [3] Strategic Focus - **Product Development**: Emphasis on high-quality products and innovative solutions, including AI applications tailored for various industries [1] - **Key Growth Drivers**: Innovative products such as robotics, thermal imaging, and smart home solutions are expected to drive client spending [1] Earnings Revision - **Earnings Forecast**: Revised down by 3% to 5% for 2025-2027 due to lower revenue expectations from the SMBG business, but gross margins are expected to improve by 0.5 to 0.3 percentage points [3][7] - **Target Price**: Adjusted to Rmb29.9 from Rmb30.6, maintaining a Neutral rating based on a 16.5x target P/E on 2026E EPS [11] Risks - **Market Competition**: Potential risks include unexpected competition in the handset lens market and fluctuations in shipment growth for camera modules [12] - **Currency Fluctuations**: Risks associated with Rmb appreciation or depreciation could impact financial performance [12] Conclusion - Hikvision is positioned for growth in 3Q25 driven by innovative and overseas business, despite challenges in the domestic market. The focus on high-quality products and operational efficiency is expected to enhance profitability, although market risks remain a concern. The revised target price reflects a cautious outlook amidst these dynamics.