AMEC's 2Q Results Were in Line with Guidance, with Memory and Logic Capex Supporting 2H Orders; Goldman Sachs Maintains Buy

Overview

The report covers AMEC's 2Q 2026 results, 2H orders, capacity and high-end equipment progress, earnings forecasts, and valuation. Goldman Sachs believes that near-term R&D and supply-chain pressures do not alter the long-term growth thesis, maintains its Buy rating, and slightly raises its 12-month target price to Rmb577.

Core views

AMEC's 2Q 2026 revenue and net profit were broadly in line with prior guidance, at approximately Rmb3.8bn and Rmb1.87bn, respectively, with the latter at the midpoint of guidance. Capex by advanced logic and memory customers, together with higher-than-expected investment income, supported the results. However, operating profit was 21% below Goldman Sachs' forecast and 29% below Bloomberg consensus, mainly because R&D expenses exceeded expectations. Goldman Sachs views this investment as a near-term drag on profit while believing that sustained R&D will help the company expand its product portfolio and build long-term growth capabilities. Demand and orders are the report's key grounds for optimism. Management is positive on generative artificial intelligence driving global wafer fabrication equipment spending and prompting Chinese customers to increase investment in advanced processes; as a domestic semiconductor process equipment supplier with advanced products, AMEC is expected to benefit. The company expects orders to maintain solid growth in 2H 2026, supported by strong customer demand and product expansion into high-end equipment. The report also notes that the company is expanding from etching and thin-film deposition equipment toward a more comprehensive process equipment platform covering CMP, metrology, advanced packaging, and other areas to capture customers' incremental demand. Capacity and product progress support order conversion. Phase I of the Shanghai Lingang facility has begun mass production, while Phase II is in the planning stage; the company is also expanding capacity at its Nanchang, Guangzhou, and Chengdu facilities. In high-aspect-ratio etching, AMEC was among the earlier vendors to enter the field. Management said it is collaborating with multiple customers to develop a new generation of 90:1 high-aspect-ratio etching equipment, which is expected to ramp gradually in 2027. Meanwhile, components for semiconductor process equipment remain under pressure in the near term, and the company is working closely with overseas and domestic suppliers to ensure equipment delivery. Incorporating the 2Q results, Goldman Sachs raised its AMEC earnings forecasts for 2026, 2027, and 2028 by 0.8%, 0.4%, and 1.1%, respectively. Revenue forecasts were raised mainly to reflect solid advanced logic and memory capex and incremental revenue from high-end equipment expansion; gross margin forecasts were broadly unchanged. To account for product R&D expenses, Goldman Sachs raised its 2026 and 2027 operating expense ratio forecasts by 0.2 to 0.5 percentage points, while increasing its non-operating income forecasts due to higher-than-expected investment income. The model forecasts 2026–2028 revenue of Rmb17.003bn, Rmb23.100bn, and Rmb29.723bn, respectively, representing year-over-year growth of 37%, 36%, and 29%; net profit of Rmb5.251bn, Rmb6.062bn, and Rmb8.342bn, respectively, representing year-over-year growth of 149%, 15%, and 38%; and earnings per share of Rmb5.52, Rmb6.33, and Rmb8.71, respectively. Over the same period, gross margin is expected to rise from 41.8% to 43.9% and 44.8%, while operating margin is expected to increase from 19% to 27% and 30%. The model further forecasts 2030 revenue, net profit, and earnings per share of Rmb48.694bn, Rmb13.612bn, and Rmb14.21, respectively, with etching equipment remaining the largest revenue contributor. On valuation, Goldman Sachs nudged its 12-month target price from Rmb576 to Rmb577 and maintained its Buy rating. The target price continues to use a discounted P/E methodology: a 56x 2030E P/E is first determined based on the correlation between global peers' 2027E P/E multiples and 2027–2028 net profit growth, with reference to net profit growth and operating margins, and is then discounted back to 2027 using an unchanged 11% cost of equity. Goldman Sachs believes that stronger earnings growth and the prospect of an industry re-rating driven by semiconductor capacity expansion and advanced-process upgrades support this valuation multiple.

Analysis framework

Goldman Sachs first compared 2Q revenue, net profit, and operating profit with company guidance, its own forecasts, and market consensus to identify variances caused by R&D investment and investment income. It then incorporated information from management's conference call to assess the growth trajectory across customer capex, orders, product expansion, advanced etching equipment, capacity, and component supply. On this basis, it adjusted its 2026–2028 revenue, expense, and non-operating income assumptions, and finally determined a forward valuation multiple based on the relationship between global peers' P/E multiples and earnings growth, discounting it at the cost of equity to derive a 12-month target price.

Methodology notes

• Valuation MethodPE/PEG valuation

  Discounted P/E Valuation

  Based on the correlation between global peers' P/E multiples and earnings growth, the report assigns AMEC a 56x 2030E P/E and discounts it back to 2027 at an 11% cost of equity to derive the 12-month target price.

Asset mapping & comparison

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

• AMEC (688012.SS)

  Demand for advanced processes driven by advanced logic and memory capex and generative artificial intelligence is expected to boost the company's semiconductor process equipment orders and revenue growth.

  Strengths

  A leading domestic semiconductor process equipment supplier with advanced etching products, expanding into platform-based solutions such as deposition, CMP, metrology, and advanced packaging; capacity expansion across multiple locations supports demand growth.

  Weaknesses

  Higher-than-expected R&D expenses caused 2Q operating profit to fall below Goldman Sachs' and market consensus estimates; equipment component supply remains under pressure in the near term.

  Comparison

  The target valuation multiple is determined with reference to the correlation between global peers' 2027E P/E multiples and earnings growth.

  Risks

  A broader scope of trade restrictions, disruptions to the supply of advanced etching equipment, and lower-than-expected capex by major Chinese foundries could all weaken demand or deliveries.

Key data

• 2Q 2026 RevenueRmb3.8bnBroadly in line with company guidance.
• 2Q 2026 Net ProfitRmb1.87bnBroadly in line with the midpoint of guidance, supported by investment income.
• Operating Profit Variance21% below Goldman Sachs' forecast and 29% below Bloomberg consensusMainly due to higher-than-expected R&D expenses.
• 2026–2028 Earnings Forecast Revisions+0.8% / +0.4% / +1.1%Incorporating 2Q results, revenue growth from advanced equipment, and higher investment income.
• 2026–2028 Revenue ForecastsRmb17.003bn / Rmb23.100bn / Rmb29.723bnCorresponding to year-over-year growth of 37% / 36% / 29%.
• 2026–2028 Net Profit ForecastsRmb5.251bn / Rmb6.062bn / Rmb8.342bnCorresponding to year-over-year growth of 149% / 15% / 38%.
• 2026–2028 Earnings per Share ForecastsRmb5.52 / Rmb6.33 / Rmb8.71Used to illustrate the earnings growth trajectory.
• 2026–2028 Gross Margin Forecasts41.8% / 43.9% / 44.8%Overall assumptions remain broadly unchanged following the earnings forecast revisions.
• 2026–2028 Operating Margin Forecasts19% / 27% / 30%The report expects margins to rise as scale expands.
• Operating Expense Ratio RevisionRaised by 0.2 to 0.5 percentage pointsApplies to 2026 and 2027, reflecting increased product R&D investment.
• 2030 ForecastsRevenue of Rmb48.694bn; net profit of Rmb13.612bn; earnings per share of Rmb14.21The main financial basis for the forward P/E valuation.
• Target Valuation Multiple56x 2030E P/EThe multiple remains unchanged and is discounted back to 2027.
• Cost of Equity11%Used to discount the 2030 target P/E back to 2027, with the assumption unchanged.
• 12-Month Target PriceRmb577Previously Rmb576.

Impact & implications

The report believes that advanced logic and memory capex, demand for advanced processes related to generative artificial intelligence, and the company's expansion from individual equipment categories into a process equipment platform will jointly support order and revenue growth. Higher R&D investment may weigh on near-term operating profit, but Goldman Sachs believes it will help advance high-end products and expand the company's long-term growth potential; capacity expansion and supply-chain assurance will affect whether orders can be converted smoothly into deliveries.

Risks

• If existing trade restrictions are expanded to mature-node fabs, demand for AMEC's products could decline further.
• If the company's ability to supply advanced-process etching equipment to overseas 5nm production lines is impeded, this could create additional downside risk.
• If capex by major Chinese foundries is weaker than expected, demand for the company's equipment and order growth could come under pressure.
• Recent supply pressure on semiconductor process equipment components could affect equipment deliveries.

What to watch

• Monitor whether orders can achieve solid growth in 2H 2026 with support from demand for advanced logic, memory, and high-end equipment.
• Watch the validation progress of 90:1 high-aspect-ratio etching equipment with multiple customers and whether it can ramp gradually in 2027.
• Track the planning of Phase II at Shanghai Lingang and capacity expansion progress at the Nanchang, Guangzhou, and Chengdu facilities.
• Monitor whether overseas and domestic suppliers can alleviate component pressures and ensure equipment deliveries.
• Track changes in capex by major Chinese foundries and the scope of trade restrictions.