Hubei Dinglong's semiconductor materials are scaling and Nomura maintains Buy with a CNY104 price target

Overview

This report is Nomura's review of Hubei Dinglong's earnings outlook. The company released preliminary 1H26 forecast guidance on July 9, 2026, expecting revenue to grow about 11% year-on-year and net profit to grow 64.0% to 73.6% year-on-year. The report attributes the growth mainly to expansion by leading domestic storage fabs and other wafer foundry customers, rising local substitution of CMP materials and photoresist, and increasing scale across the semiconductor materials platform.

Core views

The core view is that Hubei Dinglong's semiconductor materials business is entering a phase of "profitable scaling." CMP slurry, cleaning liquids and polishing pads have already formed scale-related profits. Advanced wafer photoresist is moving from validation and small-batch production toward order ramp-up, indicating that although near-term materials are affected by panel utilization, there are still advances in first-batch supply for new materials. The newly consolidated Haofei Materials also contributes incremental growth in lithium-ion battery functional materials. Nomura believes the company's semiconductor revival thesis for 2026-2030 remains intact.

Analysis framework

The report combines earnings guidance decomposition, segment-level growth tracking, domestic substitution space assessment, and relative valuation. Analytical focus includes 1H26 revenue and profit growth, scale and margin progress of CMP slurry and polishing pads, the number of photoresist SKUs and customer validations, demand from domestic storage and advanced packaging customers, and the P/E assumption behind the target price.

Methodology notes

• Valuation methodsP/E multiple valuation

  P/E valuation

  Nomura values the stock using the P/E method; the CNY104 target is based on 2026 forecast EPS of CNY1.08 and a target P/E of 96x; this multiple is about 2.5 standard deviations above the company's five-year average P/E of 51x.

• Industry spaceTAM and localization analysis

  Localization and TAM analysis

  The report assesses growth potential by evaluating domestic market size and localization rates for key materials such as CMP slurry and ArF/KrF photoresist. KrF localization is about 15%, while ArF is about 2% to 3%.

• Operational trackingSegment growth tracking

  Segment growth tracking

  The report separately tracks revenue, orders, shipments and customer validation progress in CMP slurry and cleaning liquid, CMP polishing pads, advanced wafer photoresist, display materials, and lithium-ion battery functional materials.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Hubei Dinglong 300054.SS

  Covered security

  Strengths

  CMP slurry, cleaning liquid, polishing pads and advanced wafer photoresist all show ramp-up signs; 1H26 profit growth is substantial; domestic semiconductor materials localization opportunity is large.

  Weaknesses

  Valuation is high, with current trading at 89x 2026 forecast P/E; some businesses still depend on customer validation pace and order conversion timing.

  Comparison

  Target P/E of 96x is about +2.5 standard deviations above the five-year average P/E of 51x; the report says this is supported by projected 2025-2028 profit CAGR of 33%.

  Risks

  Key risks include slower-than-expected capacity ramp-up at major customers, slower conversion of ArF/KrF orders than expected, and potential goodwill or integration risks from the lithium-ion materials acquisition.

• Domestic semiconductor materials supply chain

  Beneficiary direction

  Strengths

  Expansion by storage, wafer foundry and advanced packaging customers is driving demand for CMP materials, photoresists and related materials; key materials still have low localization rates.

  Weaknesses

  Substitution cycles are relatively long in import-dominated segments, and customer validation barriers remain high.

  Comparison

  The report notes that domestic TAM for large-diameter polishing slurry, cerium-based slurry and TSV slurry exceeds CNY1bn, and is still mainly dominated by imported suppliers.

  Risks

  Downstream semiconductor capex cycles, customer capacity ramp-up pace, and product certification progress may affect revenue realization.

Key data

• 1H26 revenue forecastCNY1,925mnUp about 11% year-on-year.
• 1H26 net profit forecastCNY510-540mnUp 64.0% to 73.6% year-on-year; 1H25 was CNY311mn.
• 1H26 net profit attributable to shareholders forecastCNY483-513mnUp 64.4% to 74.6% year-on-year.
• CMP slurry and cleaning liquid revenue growth+63% y-yProfit scale is about CNY47mn, and June single-month sales were over CNY40mn.
• CMP polishing pad revenue growth+57% y-yJune shipments exceeded 50k pieces for the first time.
• Advanced wafer photoresist ordersabout 1,000 gallons1H26 purchase order volume; more than 40 SKUs developed cumulatively, with nearly 30 in customer validation.
• Haofei Materials revenue growthabout +60% y-yRevenue growth from the newly consolidated entity in March-June 2026.
• Target priceCNY104.00Based on 2026 forecast EPS of CNY1.08 at 96x.
• Current priceCNY95.99Close on 2026-07-09.

Impact & implications

If the company can continue to increase penetration of CMP materials and photoresist among key domestic customers, its semiconductor materials business may become a major engine of profit growth and support a still relatively high valuation. The report’s investment implication is constructive, but valuation is already at a relatively high level, and ongoing execution of order conversion, capacity ramp-up, and customer validation progress will be required.

Risks

• Main customers' production ramp-up is slower than expected.
• Conversion of ArF/KrF photoresist orders is slower than expected.
• Lithium-ion battery materials acquisition may bring goodwill or integration risks.
• Target price realization may be affected by market conditions, macro trends, and deviations from company profit forecasts.

What to watch

• Whether the semiconductor materials segment can continue delivering strong growth in 2H26.
• Whether monthly sales and margins can keep rising after record June sales in CMP slurry.
• Progress on new line construction for CMP polishing pads and advancement in products related to large formats and glass substrates.
• Speed of order conversion from validation to mass supply for ArF/KrF photoresist.
• Progress in sales and partnerships for lithium-ion functional materials with key customers after the consolidation of Haofei Materials.