NAURA(SZ:002371)2025-11-03 02:36Summary of NAURA Technology Group Co Ltd 3Q25 Earnings Call Company Overview - Company: NAURA Technology Group Co Ltd - Ticker: 002371.CH - Industry: Semiconductors Key Financial Highlights - 3Q25 Revenue: RMB 11,160 million, a record high, representing a year-over-year increase of 38.3% and a quarter-over-quarter increase of 41% [2][10] - Gross Profit Margin (GPM): 40.3%, which is lower than expected and has been declining for four consecutive quarters [3][10] - Operating Profit Margin (OPM): 17.5%, missing consensus estimates by 427 basis points [10] - Net Profit Margin (NPM): 17.2%, also missing consensus by 307 basis points [10] - Earnings Per Share (EPS): Reported at CNY 2.66, which is a 17.9% increase year-over-year but missed estimates by 7.3% [10] Revenue Drivers - The revenue increase was partly attributed to the consolidation of Beijing Seven Star Flight Electronics, contributing tens of millions of RMB [2][10] - Organic revenue, excluding the acquisition, would have been around RMB 11,100 million [2] Margin Analysis - Management guided GPM to be between 40% and 43%, but the market expected the higher end of this range [3] - The decline in GPM is attributed to higher verification costs for new equipment, similar to trends seen in peers like AMEC and Piotech [3] - Concerns exist regarding the potential for further margin compression as new equipment ramps up for advanced logic [3] Employee Stock Ownership Plan (ESOP) - A new ESOP will be established from 2025 to 2027, with shares sourced from the public market and unlocked in three batches over 12, 24, and 36 months [4] Market Performance - Current Price: CNY 415.50 - Price Target: CNY 450.00, indicating an upside of 8% [5] - Market Capitalization: CNY 300,859 million [5] Risks and Concerns - Potential downside risks include prolonged down cycles in the LED and photovoltaic industries, slower-than-expected domestic equipment localization, and capital expenditure for fabs in China not meeting targets [32] Conclusion - NAURA Technology Group Co Ltd reported strong revenue growth but faced challenges with declining margins. The company maintains an outperform rating, but market sentiment may be affected by its GPM performance and ongoing risks in the semiconductor industry [1][3][10]