Summary of the Conference Call for 亚翔集成 Company and Industry Overview - **Company**: 亚翔集成 (Asia Integrated) - **Industry**: Semiconductor Cleanroom and Electromechanical Engineering Key Points and Arguments 1. **Business Segmentation**: 亚翔集成 has signed agreements with its parent company to delineate business operations in China, Singapore, Malaysia, and Vietnam, effectively avoiding competition and ensuring exclusive market rights in each region [2][5] 2. **Gross Margin Variability**: The gross margin varies significantly across different markets, with China at approximately 10% due to order fragmentation, while Singapore's gross margin is expected to rise to about 21% in 2024 due to large order contracts and improved labor management [2][6] 3. **Revenue and Profit Forecast for 联华电子**: 联华电子 (United Microelectronics) anticipates revenues of 5.5 billion RMB and profits of 550 million RMB in 2025, with a total order amount of 5 billion RMB, indicating a decline compared to 2024 [2][8] 4. **AI Impact on Semiconductor Demand**: The AI transformation is driving demand for advanced process construction in mainland China, benefiting companies like 联华电子 with extensive construction experience [2][9] 5. **Major Contracts**: In April 2025, 亚翔集成 won a contract for a wafer fab construction project worth approximately 3.8 billion RMB, and its parent company secured a cleanroom order from a leading U.S. semiconductor firm in Singapore, amounting to around 10 billion RMB [2][11] 6. **Financial Performance**: 亚翔集成 reported a revenue of 5.4 billion RMB in 2024, a 54% year-on-year increase, with a net profit of 630 million RMB, reflecting a 122% increase [3] 7. **Cash Flow and Dividend Capability**: As of the end of Q1, the company had a cash balance of 3.3 billion RMB and no interest-bearing debt, indicating strong cash flow and the ability to maintain dividends with a stable yield above 6% [4][13] 8. **Future Growth Potential**: Despite a potential slight decline in 2025 due to order cycle fluctuations, the long-term growth outlook remains positive, supported by client accumulation, historical experience, and strategic expansion into overseas markets [2][7] 9. **Investment in Southeast Asia**: The Southeast Asian region is attracting significant semiconductor investments due to its neutral geographic position, lower labor costs, and supportive policies, with major companies planning new facilities [2][10] 10. **Valuation Assessment**: Based on a 12x PE valuation using 2026 profits, the target market capitalization for the company could reach around 10 billion RMB [4][14] Additional Important Information - **Order Completion Rates**: 联华电子 has maintained a historical completion rate of over 100% for revenue, profit, and orders [2][8] - **Market Growth in Singapore**: The revenue in Singapore has grown sevenfold over the past three years, primarily due to significant contracts like the one with 联创电子 for a wafer fab expansion [3]