TFME(SZ:002156)2026-01-22 02:44Summary of TongFu Microelectronics (002156.SZ) Conference Call Company Overview - Company: TongFu Microelectronics (TFME) - Ticker: 002156.SZ - Date of Report: January 20, 2026 Key Financial Highlights - FY25 Preliminary Net Profit: Rmb1,100-1,350 million, indicating a 4Q25 net profit of Rmb240-490 million (mid-point Rmb365 million), which is a 191% YoY increase but 7% below Bloomberg consensus [1] - Revenue Growth: 4Q25 revenue expected at Rmb6.8 billion, with a YoY growth of 7% [2] - Gross Profit Margin: 4Q25 gross profit margin at 16.1%, with a YoY increase from previous quarters [2] - Operating Expenses: Operating expenses for 4Q25 at Rmb767 million, representing 11.3% of revenue [2] - Earnings Before Interest and Taxes (EBIT): EBIT for 4Q25 at Rmb366 million, with an EBIT margin of 5.4% [2] Management Insights - Earnings Growth Drivers: Management attributed strong earnings growth to: - Improved capacity utilization - Increased revenue from higher-end products - Effective cost control measures [1] - Future Outlook: TFME expects solid momentum to continue in 2026, driven by: - Increased demand for CPUs - GPU testing from key customer AMD [1] Capital Raising and Expansion Plans - Private Share Placement: TFME announced a plan to raise up to Rmb4.4 billion to fund capacity expansions in: - Memory chips (Rmb800 million) - Automotive and emerging applications (Rmb1.055 billion) - Wafer-level packaging and testing (Rmb151 million) - High-performance computing and communication (Rmb620 million) - Working capital and debt repayment (Rmb1.230 billion) [5] - Total Investment: Rmb4.686 billion planned for capacity expansion [5] Market Performance - Stock Performance: TFME shares have rallied 37% in the past month, outperforming the SZSE Index which increased by 6% [1] - Market Capitalization: As of January 20, 2026, TFME's market cap is Rmb77.413 billion (approximately US$11.108 billion) [3] Valuation and Risks - Target Price: Set at Rmb48, based on a 4.3x 2026E P/B ratio, reflecting significant re-rating potential from advanced packaging for logic and memory products [10] - Key Risks: - Disappointing development of domestic advanced memory products - Market share loss at key customers due to exclusion of AI-related business - Geopolitical tensions affecting overseas operations - Falling utilization rates post-industry capacity expansion - US export restrictions limiting supply of back-end equipment [11] Conclusion - TFME is positioned for continued growth in 2026, supported by strong demand in the semiconductor sector and strategic investments in capacity expansion. However, potential risks related to market dynamics and geopolitical factors could impact future performance.