Summary of JCET Group Co Ltd 3Q25 Earnings Call Company Overview - **Company**: JCET Group Co Ltd (600584.SS) - **Industry**: Greater China Technology Semiconductors - **Current Stock Rating**: Underweight - **Price Target**: Rmb23.50 - **Current Share Price (as of Oct 27, 2025)**: Rmb42.09 - **Market Capitalization**: Rmb74,915 million - **Fiscal Year Ending**: December Key Financial Metrics - **EPS Estimates**: - 2025: Rmb1.06 - 2026: Rmb1.41 - 2027: Rmb1.89 - **Revenue Estimates (Rmb million)**: - 2025: 41,361 - 2026: 45,655 - 2027: 52,372 - **EBITDA Estimates (Rmb million)**: - 2025: 6,550 - 2026: 7,781 - 2027: 8,180 - **P/E Ratios**: - 2025: 39.7 - 2026: 29.9 - 2027: 22.3 Core Insights from the Earnings Call - **4Q25 Outlook**: Management anticipates a continued recovery in demand, particularly driven by AI applications expanding from data centers to various markets [5][6] - **Advanced Packaging Focus**: The company is concentrating on 2.5D and 3D advanced packaging technologies, aiming for computing-related products to constitute over 30% of their mix in the medium term. Innovations such as TGV (through glass via), panel-level packaging, and CPO (co-packaged optics) are highlighted as key technological advancements [5][6] - **Gross Margin Improvement**: JCET has successfully negotiated with customers to pass on raw material price increases, with high acceptance rates. The company expects gross margins to improve steadily in the medium to long term due to a higher proportion of high-value-added business [5][6] - **Utilization Rate**: The utilization rate improved to 80% in 3Q25, particularly in wafer-level packaging, where capacity is currently tight [5][6] Risks and Opportunities - **Upside Risks**: - Better-than-expected demand in communication, computing, and consumer electronics - Earlier-than-expected provision of 2.5D/3D advanced packaging - Faster-than-expected market share gains [9] - **Downside Risks**: - Worse-than-expected demand in the same sectors - Delays in the provision of advanced packaging technologies - Slower-than-expected market share gains [9] Valuation Methodology - **Model Used**: Residual income model with a cost of equity of 8.6%, intermediate growth rate of 8.5%, and terminal growth rate of 4.0% [7] Additional Information - **Analyst Ratings**: The stock is rated as Underweight, indicating expected total returns below the average for the industry over the next 12-18 months [24][30] - **Market Context**: The semiconductor industry is viewed as attractive, with JCET positioned within this context despite its individual stock rating [3][32] This summary encapsulates the key points from the earnings call, providing insights into JCET Group Co Ltd's performance, outlook, and strategic focus within the semiconductor industry.