Summary of JCET (600584.SS) Conference Call Company Overview - **Company**: JCET (Jiangsu Changjiang Electronics Technology Co., Ltd.) - **Industry**: Semiconductor and advanced packaging Key Financial Results - **2Q25 Revenue**: Rmb 9.27 billion, a 7% increase YoY but a 1% decrease QoQ, missing estimates by 17% and 9% respectively [1][2] - **Gross Margin**: Improved to 14.3%, matching 2Q24 levels, higher than estimates of 13.3% [1][2] - **Net Income**: Decreased by 45% YoY to Rmb 267 million, missing estimates by 50% [1][2] - **Operating Income**: Rmb 427 million, down 27% from estimates [2] Segment Performance - **Consumer Electronics**: Softer than expected, with a slight YoY decrease in 1H25 [1] - **Other Segments**: Communication, computation, automobile, industrial, and healthcare achieved double-digit revenue growth YoY [1] - **Automotive Electronics**: Revenue increased by 34% YoY in 1H25, supported by the new Shanghai plant expected to start production in 2H25 [3] Operational Insights - **R&D Investment**: Increased from Rmb 459 million in 1Q25 to Rmb 528 million in 2Q25, indicating ongoing expansion into new products [1] - **Capacity Expansion**: New Shanghai plant for automotive electronics completed in 1H25 [3] Earnings Revisions - **2025E Net Income**: Revised down by 15% due to lower revenues and higher operating expenses [8] - **2025E Revenue**: Revised down by 4% to Rmb 41.96 billion, reflecting weaker consumer electronics demand [8][9] - **Future Growth**: Expected revenue growth of 26% HoH in 2H25 due to seasonal demand recovery [8] Valuation and Price Target - **Target Price**: Rmb 39.3, based on a target P/E of 23.3x 2026E EPS [17][19] - **Current Price**: Rmb 37.70, indicating a modest upside of 4.2% [19] Risks and Considerations - **Key Risks**: Variability in semiconductor capex expansion in China, technology development pace, and advanced packaging shipment ramp-up [18] Conclusion - JCET is positioned to benefit from the recovery in semiconductor demand, particularly in the automotive sector, despite recent earnings misses and challenges in the consumer electronics segment. The company maintains a neutral rating due to modest upside potential based on current valuations.

Financial Data and Key Metrics Changes - Revenue for Q2 2025 was $2,209 million, down 1.7% sequentially [5] - Gross margin decreased to 20.4%, down 2.1 percentage points sequentially [6] - EBITDA was $1,129 million with an EBITDA margin of 51.1% [6] - Profit attributable to the company was RMB 132 million [6] - Total assets at the end of Q2 were $49.4 billion, with total cash on hand of $13.1 billion [6] - Total liabilities were $16.7 billion, with total debt of $11.9 billion [6] - For the first half of 2025, revenue was $4,456 million, up 22% year over year [15] - Gross margin for the first half was 21.4%, up 7.6 percentage points year over year [15] Business Line Data and Key Metrics Changes - Blended ASP decreased by 6.4% sequentially, while wafer shipments increased by 4.3% to 2,390 standard logic eight-inch equivalent wafers [10] - Revenue from automotive electronics shipments grew by 20% quarter over quarter, primarily from various types of automotive grade chips [12] - Revenue from eight-inch wafers achieved a 7% quarter over quarter growth [13] - Revenue from CIS increased over 20% sequentially, while RF revenue also showed sound growth [14] Market Data and Key Metrics Changes - Revenue distribution by region: China 84%, America 13%, and Eurasia 3%, with no significant changes quarter over quarter [11] - By application, wafer revenue from smartphones, computers and tablets, consumer electronics, connectivity and IoT, industrial, and automotive accounted for 25%, 15%, 41%, 8%, and 11% respectively [11] Company Strategy and Development Direction - The company aims to exceed industry average performance in the same market for the year [17] - Focus on deep collaborations with domestic customers to gain market share in analog chips [13] - The company is preparing for increased output to mitigate the impact of rising depreciation costs [16] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about potential impacts from tariff policies and market stimulus on future demand [17] - Despite concerns, the company believes that the slowdown will not significantly impact capacity utilization due to strong demand [17] - Visibility for Q4 remains limited due to potential slowdowns in rush orders and shipment pull-ins [16] Other Important Information - Total capital expenditure for the first half of the year was $3,301 million [15] - Guidance for Q3 2025 indicates expected revenue growth of 5% to 7% sequentially, with gross margin anticipated to be between 18% to 20% [8][16] Q&A Session Summary Question: What are the expectations for revenue growth in Q3? - The company expects revenue to increase by 5% to 7% sequentially in Q3 [8] Question: How is the company addressing the challenges posed by tariff policies? - Management is closely monitoring customer feedback and evaluating the impact of tariff policies on demand [17] Question: What is the outlook for capacity utilization in the upcoming quarters? - The company believes that strong demand will help maintain high capacity utilization despite potential slowdowns [17] Question: Can you provide insights on the automotive electronics segment? - The automotive electronics segment has shown steady growth, contributing significantly to overall revenue [12]