JCET's 2Q26 net profit guidance exceeded expectations, and advanced packaging expansion reinforces the long-term growth thesis

Overview

This report comments on JCET's 2Q26 net profit guidance and new advanced packaging capacity. Goldman Sachs believes the company is benefiting from revenue growth and higher capacity utilization driven by AI infrastructure investment, while its product mix is upgrading toward higher-end OSAT services, gross margin is improving, and cost control discipline is strengthening. The report raises its 2026E earnings forecast but maintains the 12-month target price of Rmb125 and the Neutral rating.

Core views

The core views include: first, the midpoint of 2Q26 net profit guidance at Rmb570mn is significantly above the market focus level, reflecting improving demand and profitability; second, the Rmb7.8bn advanced packaging expansion will support long-term shipment growth and product mix upgrade, while capturing domestic demand for advanced packaging in AI computing chips, high-end consumer electronics, and automotive electronics; third, 2026E net profit is revised up by 5%, mainly due to higher revenue, gross margin improvement, and higher utilization; fourth, despite improved earnings prospects, the target price is unchanged under the valuation framework, so Neutral is maintained.

Analysis framework

The report uses earnings forecast revisions, margin trend analysis, peer P/E relative to earnings growth and operating profit margin correlation, and a discounted 2030E P/E valuation framework. Goldman Sachs discounts the 46x target P/E back to 2027E and uses an 11% COE assumption to derive the 12-month target price.

Methodology notes

• Valuation methodsDiscounted 2030E P/E

  The target price is based on a 46x 2030E target P/E discounted back to 2027E.

  The target multiple is derived from the correlation between peer P/E and the sum of future net profit growth and operating profit margin; the report assumes 2031E net profit growth of 18% YoY, OPM of 10%, and uses an 11% COE discount rate.

• Forecast revisionEarnings forecast upgrade

  Update the 2026E forecast based on 2Q26 net profit guidance, revenue, and gross margin.

  Goldman Sachs raises 2026E revenue to Rmb46.802bn and 2026E net profit by 5% to Rmb2.596bn, mainly reflecting AI-related end-demand, product mix upgrade, and utilization improvement.

• Investment frameworkGS Factor Profile

  Compare stock attributes across four categories: Growth, Financial Returns, Multiple, and Integrated.

  This framework is used to compare the stock with the market and industry peers; this report discloses the framework description but does not provide specific percentile results for JCET.

Asset mapping & comparison

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

• JCET (600584.SS)

  Research target; a Chinese semiconductor packaging, testing, and advanced packaging company

  Strengths

  AI infrastructure demand is driving revenue growth; high-end OSAT product mix upgrade; utilization improvement; Rmb7.8bn advanced packaging expansion reinforces long-term growth.

  Weaknesses

  Valuation is high, with the target price implying 2027E P/E of 67x; earnings improvement still depends on the ramp-up of advanced packaging shipments and the industry capex cycle.

  Comparison

  The peer valuation framework references the relationships among P/E, OPM, and net profit growth for companies such as Huatian, TSMC, Forehope, Amkor, ASE, and Tongfu; JCET's target multiple corresponds to 46x 2030E P/E.

  Risks

  China semiconductor capex expansion faster or slower than expected, technology development faster or slower than expected, and advanced packaging shipment ramp-up faster or slower than expected.

Key data

• Midpoint of 2Q26 net profit guidanceRmb570mn+113% YoY and +96% QoQ.
• Investment in new advanced packaging capacityRmb7.8bnPhase-one investment includes plant construction and equipment investment, with completion targeted in 2H28E.
• 2026E revenueRmb46.802bnRaised 1% from the previous forecast of Rmb46.398bn.
• 2026E net profitRmb2.596bnRaised 5% from the previous forecast of Rmb2.464bn.
• 2026-2028E net profit CAGR+34%Driven by the upcycle in AI infrastructure, product mix upgrade, and capacity expansion.
• 2026E gross margin14.7%Previous forecast was 14.6%, raised by 0.1 percentage point.
• 2030E target P/E46.0xUsed to derive the 12-month target price.
• Target priceRmb125Maintained unchanged; implies 2027E P/E of 67x.
• COE assumption11%Derived from Beta 1.20, risk-free rate 3.5%, and market risk premium 6.5%.

Impact & implications

The report's implication for JCET is moderately positive: the near-term earnings guidance strengthens confidence in earnings improvement, while the medium- to long-term advanced packaging expansion enhances the company's ability to serve demand from AI computing chips, high-end consumer electronics, and automotive electronics. However, Goldman Sachs believes valuation already partially reflects the long-term growth opportunity, so it maintains Neutral with an unchanged target price.

Risks

• The pace of China's semiconductor capex expansion could be faster or slower than expected.
• The development of advanced-packaging-related technology could be faster or slower than expected.
• The ramp-up of advanced packaging shipments could be faster or slower than expected.
• If AI-related end demand slows, it could affect revenue growth, utilization, and product mix upgrade.
• Under a high valuation, weaker-than-expected earnings delivery could lead to share price volatility.

What to watch

• Whether actual 2Q26 net profit reaches or exceeds the guidance midpoint of Rmb570mn.
• The continued boost from AI infrastructure investment to JCET's revenue and capacity utilization.
• Construction, equipment investment, and phase-one completion progress by 2H28E for the Rmb7.8bn advanced packaging expansion project.
• The contribution of a higher mix of high-end OSAT services to gross margin and net margin.
• Delivery against 2026E revenue of Rmb46.802bn, net profit of Rmb2.596bn, and 2026-2028E net profit CAGR of 34%.