Memory and advanced logic capacity expansion supports NAURA's orders; Goldman Sachs reiterates Buy and RMB1,200 target price

Overview

The report reviews NAURA's 2Q26 results and distinguishes the short-term earnings miss from the medium- to long-term order outlook: supply chain constraints, revenue recognition timing, consolidation effects, and R&D investment weighed on quarterly performance, but capacity expansion by memory and advanced logic customers and rising domestic semiconductor equipment market share continue to support future growth. Goldman Sachs lowered its 2026 earnings forecast by 4% while maintaining its 2027-2028 forecasts, Buy rating, and RMB1,200 target price.

Core views

NAURA generated 2Q26 revenue of RMB9.8bn, up 24% YoY and down 5% QoQ, 10% and 11% below Goldman Sachs' forecast and Bloomberg consensus, respectively. Management attributed the sequential decline to two factors: some demand was recognized earlier in 1Q26, and constrained supplies of semiconductor production equipment components extended delivery cycles. This suggests that weak quarterly revenue reflected not only demand factors but also inter-quarter recognition timing and supply capacity. Profitability was also weaker than expected. The 2Q26 gross margin was 39.3%, below 40.8% in 1Q26 and 41.3% in 2Q25, mainly due to a one-off impact from consolidating Kingsemi, according to the report. As the R&D expense ratio was higher than expected, net profit grew only 7% YoY, coming in 10% below Goldman Sachs' forecast and 11% below Bloomberg consensus. Goldman Sachs therefore attributed the quarterly miss to the combined effects of revenue scale, consolidation, and R&D investment rather than to a single change in end demand. Orders and industry capex are central to the report's positive view. Management expects robust order growth during the year, driven primarily by accelerated capacity expansion among local memory and advanced logic customers and continued market-share gains by domestic semiconductor production equipment suppliers. Goldman Sachs expects China's semiconductor capex to rise from US$46bn in 2025 to US$51bn in 2026 and US$59bn in 2027, representing YoY growth of 13% and 15%, respectively, and forecasts continued growth from 2028 to 2030. Local demand and generative AI trends are viewed as important supports for capacity expansion. NAURA's products cover several critical processes, including etching, deposition, cleaning, and thermal processing. The report believes its relatively comprehensive equipment portfolio helps the company capture customer capacity-expansion demand, while its in-house semiconductor equipment components subsidiary and partnerships with third-party suppliers support production and component supplies. However, component supply constraints and longer delivery cycles already emerged in 2Q26, indicating that supply assurance will continue to affect the pace at which orders convert into revenue. Regarding earnings forecasts, after incorporating the 2Q26 results, Goldman Sachs lowered its 2026 earnings forecast by 4%, mainly due to lower mature-node equipment revenue and higher-than-expected R&D operating expenses, while leaving its 2027-2028 earnings forecasts broadly unchanged. This adjustment reflects the report's view that the short-term earnings base requires revision, but the medium- to long-term growth thesis supported by memory and advanced logic capacity expansion remains intact. On valuation, Goldman Sachs continues to use a discounted 2030E P/E methodology to reflect the company's long-term growth opportunities. The target P/E remains unchanged at 56x, based on the relationship between peer P/E multiples and the sum of next-year net profit growth and operating margin, and incorporating NAURA's 2031 YoY net profit growth and operating margin. Goldman Sachs applies the 56x target P/E to its 2030 forecast and discounts it to 2027 at an 11% cost of equity, deriving an unchanged 12-month target price of RMB1,200 and reiterating its Buy rating.

Analysis framework

The report first compares 2Q26 revenue, gross margin, and net profit with the prior quarter, the same period last year, Goldman Sachs' forecasts, and Bloomberg consensus, then uses management's explanations to break down the reasons for the revenue and profit variances. It subsequently assesses the order outlook based on forecasts for China's semiconductor capex, capacity expansion by memory and advanced logic customers, rising domestic equipment market share, and NAURA's product coverage, and adjusts annual earnings forecasts accordingly. Finally, it determines the target multiple based on the relationship between peer P/E multiples, earnings growth, and operating margins, and discounts the forward valuation at the cost of equity.

Methodology notes

• Valuation MethodologyPE/PEG valuation

  Discounted 2030E P/E valuation

  Goldman Sachs applies a 56x target P/E to NAURA's 2030 earnings forecast and discounts it to 2027 at an 11% cost of equity to reflect long-term growth opportunities and derive a 12-month target price of RMB1,200. The target multiple references the relationship between peer P/E multiples, net profit growth, and operating margins.

• Industry/Sector Analysis FrameworkSupply-demand framework

  Analysis of customer capacity expansion, equipment demand, and supply constraints

  The report assesses equipment demand based on capacity expansion by memory and advanced logic customers while examining how component supply constraints affect delivery cycles and revenue recognition, helping explain quarterly performance and the subsequent order outlook.

• Industry/Sector Analysis FrameworkUpstream-Midstream-Downstream Industry Chain Transmission

  Transmission from semiconductor capex to equipment orders

  The report believes higher capex by local chipmakers will increase demand for semiconductor production equipment and translate into orders and revenue for NAURA through market-share gains by domestic equipment suppliers.

Asset mapping & comparison

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

• NAURA Technology Group (002371.SZ)

  A beneficiary of capacity expansion by Chinese memory and advanced logic customers and rising domestic semiconductor equipment market share; the report reiterates its Buy rating.

  Strengths

  Covers multiple types of semiconductor production equipment, including etching, deposition, cleaning, and thermal processing, and has an in-house components subsidiary and a third-party supplier partnership network.

  Weaknesses

  2Q26 revenue and net profit were below Goldman Sachs and market expectations, gross margin declined, and mature-node equipment revenue and R&D expenses pressured 2026 earnings.

  Comparison

  2Q26 revenue was 10% below Goldman Sachs' forecast and 11% below Bloomberg consensus; net profit was also 10% and 11% below, respectively. The target multiple is determined based on the relationship between peer P/E multiples, net profit growth, and operating margins.

  Risks

  Further US restrictions on exports to Chinese semiconductor companies or slower-than-expected capacity expansion by mature-node customers could weaken equipment demand, revenue, and earnings.

Key data

• 2Q26 RevenueRMB9.8bnUp 24% YoY and down 5% QoQ; 10% below Goldman Sachs' forecast and 11% below Bloomberg consensus
• 2Q26 Gross Margin39.3%40.8% in 1Q26 and 41.3% in 2Q25; the decline was mainly due to the one-off impact of consolidating Kingsemi
• 2Q26 Net Profit GrowthUp 7% YoY10% below Goldman Sachs' forecast and 11% below Bloomberg consensus, with the R&D expense ratio higher than expected
• China Semiconductor CapexUS$46bn in 2025; US$51bn in 2026; US$59bn in 2027Goldman Sachs expects YoY growth of 13% and 15% in 2026 and 2027, respectively, followed by continued growth from 2028 to 2030
• 2026 Earnings Forecast RevisionLowered by 4%Mainly due to lower mature-node equipment revenue and higher-than-expected R&D operating expenses
• 2027-2028 Earnings ForecastsBroadly unchangedNo material change to the medium- to long-term earnings view
• 12-Month Target PriceRMB1,200Unchanged
• Target P/E56x 2030E P/EUnchanged and discounted to 2027
• Cost of Equity11%Used to discount the 2030 target valuation to 2027

Impact & implications

The report believes that below-expected revenue and profit in 2Q26 will reduce the 2026 earnings base but do not change the outlook for subsequent order growth. Capacity expansion by memory and advanced logic customers, growth in China's semiconductor capex, and rising domestic equipment market share are expected to support NAURA's medium- to long-term equipment demand. Its relatively comprehensive product portfolio is advantageous in capturing this demand, although component supply capacity will affect order conversion and revenue recognition timing.

Risks

• If the US further tightens export restrictions on Chinese semiconductor companies, customers may delay capacity-expansion plans and reduce demand for NAURA's equipment.
• If mature-node customers expand capacity more slowly than expected, NAURA's revenue growth may fall below Goldman Sachs' forecast and earnings may come in below current estimates.

What to watch

• Capacity-expansion progress and order growth among memory and advanced logic customers.
• Whether China's semiconductor capex reaches the forecasts of US$51bn in 2026 and US$59bn in 2027.
• Whether semiconductor equipment component supply constraints and delivery cycles improve.
• Subsequent changes in mature-node equipment revenue and the R&D expense ratio.
• Progress in market-share gains by domestic semiconductor equipment suppliers.