Summary of Conference Call on China Semiconductors Industry Overview - The conference call focused on the semiconductor equipment industry in China, specifically discussing the performance and outlook of three companies: NAURA, AMEC, and Piotech. Key Points Company Performance - **Stock Performance**: Since the last earnings report, Piotech's stock increased by 73%, AMEC by 43%, and NAURA by 10, indicating strong market interest [1][2]. - **Earnings Reports**: All three companies reported earnings for Q3 2025, with a general consensus that the market may take a pause after recent rallies, but there is potential for further upside in the next 12 months due to stronger demand for wafer fabrication equipment (WFE) in China [1][2]. Market Sentiment and Growth Outlook - **Positive Outlook for 2026**: Conversations with companies post-earnings revealed that WFE spending in China for 2025 is expected to exceed previous expectations, with further growth anticipated in 2026 driven by DRAM, NAND, and advanced logic capacity expansions [2][3]. - **Localization Trends**: There is a significant increase in the localization ratio for DRAM and mature logic, which is expected to continue, contributing to stronger order growth [2][3]. Profitability and Valuation - **Profitability Pressure**: Despite the positive market sentiment, all three companies faced pressure on gross profit margins (GPM) due to increased price competition and customer pressures, particularly in NAND and mature logic segments [3][4]. - **Market Valuation Shift**: The market has shifted its focus from earnings per share (EPS) growth to revenue and order growth, which has contributed to the recent stock rallies [3][4]. Company-Specific Insights - **NAURA**: - Maintains a strong market position with a diverse product portfolio and client base. Management guided for 2025 revenue of RMB 39.5-40 billion and net profit of RMB 6.5 billion, with a focus on market share and R&D over immediate profitability [6][9]. - Expected revenue growth of 34% in 2025 and 28% in 2026, with a long-term target for GPM around 40% [9][11]. - **AMEC**: - Focuses on dry etch and deposition technologies, with a projected revenue growth of 38% in 2025 and 34% in 2026. Management remains confident in order and revenue growth despite lower GPM expectations [7][36]. - Heavy R&D investments are expected to yield future benefits, with a long-term GPM target of 40% [33][36]. - **Piotech**: - Experienced a strong performance in Q3 2025 but faces challenges in revenue recognition due to longer conversion cycles. Management is optimistic about increasing market share within CXMT and benefiting from NAND applications [8][64][65]. - Approximately 2/3 of revenue comes from memory, indicating a strong focus on NAND technology [64][65]. Investment Implications - **Stock Ratings**: - NAURA is rated as "Outperform" with a target price of CNY 480, AMEC at CNY 380, and Piotech at CNY 375, reflecting positive sentiment and growth potential in the sector [4][5][6]. - **Valuation Adjustments**: Target prices for all three companies have been revised upwards based on positive signals from memory and advanced logic sectors, while GPM assumptions have been adjusted downwards [4][5][6]. Conclusion - The semiconductor equipment sector in China is poised for growth, driven by increased localization, strong demand for memory, and advancements in technology. While profitability pressures exist, the overall sentiment remains positive, with significant upside potential anticipated in the coming year.

Summary of Conference Call on China Semiconductors Industry Overview - The conference call focused on the semiconductor equipment industry in China, specifically discussing the companies NAURA, AMEC, and Piotech. Key Points Company Performance and Outlook 1. **Piotech's Growth Potential**: Piotech is expected to capture a 58% upside in the next 12 months, driven by rapid EPS growth and currently trading at 30X 2026E EPS, indicating it is underappreciated [2][5][10]. 2. **Order Growth**: All three companies (NAURA, AMEC, Piotech) reported over 40% order growth year-over-year in 1H25, with Piotech's management indicating alignment with industry growth [3][4]. 3. **Profitability Variations**: While Piotech is expected to see a recovery in gross profit margin (GPM) and normalization of R&D expenses, AMEC faces pressure due to high R&D ratios [4][69]. Financial Projections 1. **Piotech's Financials**: - Projected revenue growth of 40% in 2025E, 38% in 2026E, and 31% in 2027E, with a significant EPS increase expected [11][12]. - EPS is projected to grow from RMB 3.52 in 2025E to RMB 6.31 in 2026E, reflecting a 79% increase [12][23]. - GPM is expected to stabilize around 38.4% in 2025E and improve to 43.5% in 2026E [15][21]. 2. **NAURA's Financials**: - Revenue projections for NAURA are set at RMB 38.8 billion in 2025E, growing to RMB 62.1 billion by 2027E, with a GPM of 42.7% in 2025E [46][48]. - EPS is expected to reach RMB 10.61 in 2025E, with a growth rate of 35% [54]. 3. **AMEC's Financials**: - AMEC's revenue is projected to grow at 34% in 2025E, with a significant reduction in GPM to 40% due to increased R&D expenses [69][70]. - EPS is expected to be RMB 5.45 for 2026E, maintaining a P/E multiple of 55x [70]. Investment Recommendations 1. **Price Targets**: - Piotech's price target raised to CNY 300 from CNY 280, indicating strong upside potential [5][10]. - NAURA's price target increased to CNY 450 from CNY 400, reflecting confidence in its market position [5][45]. - AMEC's price target remains at CNY 300, despite profitability concerns [5][70]. R&D and Capital Expenditures 1. **R&D Discipline**: Piotech has shown a disciplined approach to R&D, maintaining a lower expense ratio compared to peers, which is expected to benefit its net profit margin (NPM) [4][11]. 2. **Investment in Infrastructure**: Piotech announced plans to raise RMB 4.6 billion for a semiconductor equipment industrialization base and a cutting-edge technology R&D center [13][14]. Market Sentiment 1. **Positive Sentiment**: The overall sentiment in the semiconductor equipment market is optimistic, with expectations of continued order growth and profitability improvements for Piotech, NAURA, and AMEC [3][4][8]. Additional Insights - The shift in order growth dynamics, particularly in advanced logic and memory sectors, is expected to benefit all three companies in the coming years [3][43]. - The competitive landscape is intensifying, with all companies facing pressure on margins due to increased R&D investments and changing accounting rules [4][69]. This summary encapsulates the key insights and projections discussed during the conference call, highlighting the growth potential and challenges faced by the semiconductor equipment companies in China.