JCET(SH:600584)2026-01-19 02:29Summary of JCET Group Co Ltd Conference Call Company Overview - Company: JCET Group Co Ltd (600584.SS) - Industry: Semiconductor, specifically Outsourced Semiconductor Assembly and Test (OSAT) - Region: Asia Pacific, Greater China Key Points and Arguments Market Outlook - OSAT Market Growth: The OSAT market is expected to benefit from strong semiconductor sales growth, projected to accelerate from 25% in 2025 to 45% in 2026, driven by AI demand [2][9] - Revenue Projections: JCET's revenue is expected to grow by 16% in 2026, up from 8% in 2025, reflecting the overall semiconductor cycle [2][9] Advanced Packaging - 2.5D Packaging: JCET has launched its XDFOI™ platform, with 2.5D packaging entering volume production in Q3 2025. This segment is expected to contribute approximately US$714 million in revenue, accounting for 10% of total revenue by 2027 [3][11] - Long-term Profitability: While near-term profitability is uncertain due to high depreciation and R&D investments, the advanced packaging business is anticipated to be margin-accretive in the long run [3][11] Consumer Business Challenges - Memory Price Hikes: The consumer segment, which accounts for 60% of JCET's revenue, is expected to face challenges due to memory price hikes impacting unit growth in the PC and smartphone markets in 2026 [4][17] - Outsourcing Opportunities: Despite challenges, increased demand for memory is likely to boost back-end demand, with JCET benefiting from Chinese memory IDMs outsourcing their back-end packaging business [4][17] Financial Performance and Valuation - Stock Rating Change: The stock rating has been adjusted from Underweight to Equal-weight, with a price target raised from Rmb23.50 to Rmb48.50 [1][5] - Current Stock Performance: JCET's stock has increased by 26% year-to-date, outperforming the Shanghai Composite Index, which rose by 2% during the same period [5] - Valuation Comparison: JCET trades at a 2026 P/E of 32x, higher than ASE's 21x, indicating that current prices may reflect the positives of advanced packaging [5][19] Risks and Considerations - Profitability Uncertainty: There are concerns regarding the profitability of 2.5D/3D packaging due to high depreciation and R&D costs, which may weigh on near-term earnings [19] - Policy Risks: JCET has significant exposure to overseas markets (81% in 2024) and has been affected by US OSAT regulations, creating uncertainty regarding future operations [19] Earnings Estimates - Revised Estimates: The 2025 EPS estimate has been lowered by 12%, while 2026 and 2027 EPS estimates have been raised by 7% and 19%, respectively, reflecting expectations of improved margins and revenue from advanced packaging and memory outsourcing [23][24] Conclusion - Investment Thesis: The outlook for JCET is cautiously optimistic, with expected revenue growth driven by advanced packaging and AI demand, despite challenges in the consumer segment and potential risks from policy changes and profitability uncertainties [37][19]