Summary of the Conference Call on China Semiconductors Industry Overview - The conference focused on the semiconductor industry in China, particularly highlighting the SEMICON China Booth Tour held on March 26, 2026, which included visits to over 20 companies across various sub-segments of the semiconductor industry [1][9]. Key Insights - **Product Launch Trends**: The new product launches in 2026 are increasingly focused on high-end tools to meet the rising demand for advanced logic, memory, and advanced packaging. This trend is driven by local clients' capacity expansions [2][3]. - **Capacity Expansion**: There is a positive outlook on the expansion of semiconductor capacity in China, with expected capital expenditure (capex) spending projected to reach approximately US$45 billion to US$46 billion from 2026 to 2030, an increase from US$41 billion to US$43 billion in 2024 and 2025 [3][10]. - **Investment Focus**: The investment focus is anticipated to shift more towards memory and advanced node technologies, with industry leaders expected to continue their expansion [3]. Company Highlights - **Recommended Stocks**: The report recommends several companies for investment, including: - Kematek (Target Price: Rmb171) - SMIC (4Q25 Operating Profit beat) - Hua Hong - AMEC (Target Price: Rmb311.58) - Horizon Robotics (Target Price: HK$15.3) - Biren - MetaX - Naura - ACMR - SICC - AccoTest - Cambricon [3][34]. Company Specifics - **SPE Companies**: Notable companies in the SPE segment include: - NAURA: Buy rating with new product launches in etching and deposition. - AMEC: Buy rating with new high selectivity etchers and MOCVD equipment. - AccoTest: Buy rating with the launch of STS8600 testing equipment [8]. - **SIC Substrate**: SICC is highlighted for its 12" and 8" SiC substrates, receiving a Buy rating [8]. Additional Insights - **Local Supplier Expansion**: Local suppliers are expanding their offerings from core products to more comprehensive platform solutions, indicating a shift in the market dynamics [2]. - **EDA Software**: Companies like Primarius and Semitronix are involved in EDA software, which is crucial for the semiconductor design and testing processes [1][8]. Conclusion - The semiconductor industry in China is poised for significant growth, driven by technological advancements and increased local demand. The focus on high-end tools and memory technologies presents a favorable investment landscape for identified companies.

Investment Rating - The report maintains a Buy rating on Advanced Micro-Fabrication Equipment (AMEC) with a target price of Rmb220, indicating an expected share price return of 14.9% and a total expected return of 15.1% [2][15]. Core Insights - AMEC's 2024 results showed revenue and gross profit growth of 45% and 36% year-over-year, respectively, aligning with preliminary results. However, net profit decreased by 9% year-over-year to Rmb1.61 billion due to lower investment incomes [1]. - The gross profit margin (GPM) contracted by 2.8 percentage points year-over-year to 41.1% in 2024, attributed to price discounts offered to customers in China [1]. - Operating cash flow (OCF) improved significantly to Rmb1.46 billion cash inflow in 2024, compared to Rmb977 million outflow in 2023 [1]. - Despite the challenges, the report emphasizes that AMEC's solid fundamentals and the import replacement thesis remain intact [1]. Summary by Sections Earnings Summary - In 2024, AMEC's net profit is projected at Rmb1,626 million, with a diluted EPS of Rmb2.626, reflecting an EPS growth decline of 8.8%. For 2025, net profit is expected to rise to Rmb2,391 million, with an EPS of Rmb3.862, indicating a growth of 47.1% [4]. - The report outlines a decreasing P/E ratio from 72.9 in 2024E to 49.6 in 2025E, suggesting improved valuation metrics over time [4]. Market Comparison - The report indicates a preference for NAURA (002371.SZ) over AMEC due to NAURA's potential for mergers and acquisitions to expand its product portfolio and its cheaper price-to-sales (P/S) valuation [2][15]. - AMEC's P/S valuation is based on approximately 11 times the 2025 estimated sales, reflecting the market's recognition of its semi-equipment business [15].