EMPYREAN(SZ:301269)2025-06-02 15:44Summary of Empyrean Technology Co Ltd Conference Call Company and Industry Overview - Company: Empyrean Technology Co Ltd (Ticker: 301269.SZ) - Industry: Greater China Technology Semiconductors - Market Cap: Rmb63,122.4 million - Stock Rating: Equal-weight - Price Target: Rmb115.00 - Current Price (as of May 28, 2025): Rmb116.26 - Average Daily Trading Value: Rmb495 million Key Points and Arguments 1. Impact of EDA Restrictions: The Trump Administration has reportedly requested leading Electronic Design Automation (EDA) companies, including Synopsys and Cadence, to stop shipping tools to China. This has led to significant stock declines for these companies, with Cadence down 10.7% and Synopsys down 9.6% [1][2] 2. Market Share Dynamics: In 2024, Cadence, Synopsys, and Siemens held 82% of China's EDA market share, while Empyrean Technology accounted for 10%. If U.S. export restrictions tighten, it may accelerate the adoption of local EDA tools in China, potentially benefiting Empyrean [2] 3. Financial Projections: - Revenue Estimates: - 2024: Rmb1,222 million - 2025: Rmb1,558 million - 2026: Rmb2,000 million - 2027: Rmb2,666 million - EPS Estimates: - 2024: Rmb0.20 - 2025: Rmb0.66 - 2026: Rmb1.16 - 2027: Rmb1.65 [4] 4. Valuation Methodology: The base case value is derived from a residual income model, assuming a constant cost of equity at 8% and medium-term growth rates of 25% [6] 5. Risks: - Upside Risks: Faster-than-expected breakthroughs in digital IC EDA, fewer restrictions on semi equipment access, and an increase in local EDA talent [8] - Downside Risks: Slower breakthroughs in EDA, more restrictions on semi equipment access, and a drought in local EDA talent [8] Additional Important Information - Earnings Growth: The company is expected to see significant earnings growth, with EPS projected to increase from Rmb0.20 in 2024 to Rmb1.65 by 2027 [4] - Market Position: Empyrean's current market position may improve if local EDA tools gain traction due to geopolitical tensions affecting foreign EDA companies [2] - Analyst Coverage: The report includes multiple analysts from Morgan Stanley, indicating a robust research backing for the company's outlook [3] This summary encapsulates the critical insights from the conference call regarding Empyrean Technology Co Ltd and the broader semiconductor industry context.