Goldman Sachs maintains Buy on Anji Micro and raises target price to Rmb381

Overview

This report is a company research update by Goldman Sachs on Anji Micro (688019.SS). The report believes that the company’s 1Q26 revenue growth was in line with expectations, mainly driven by new CMP slurry products and applications as well as strong growth in wet chemicals; however, gross margin and net profit came in below expectations, reflecting a higher share of wet chemicals in the product mix and weaker-than-expected non-operating items. Despite short-term gross margin volatility, Goldman Sachs remains positive on the company’s broad coverage in CMP slurry and wet chemicals, and believes that upgrading toward advanced process nodes and new material applications will improve profitability.

Core views

The core views include: first, new CMP slurry applications and the volume ramp-up of wet chemicals are the main drivers of revenue growth; second, wet chemicals grew 64% YoY in 2025, ramping faster than CMP slurry, while Damascene ECP remains at an early stage but has already achieved a breakthrough; third, short-term gross margin is dragged by product mix, but as scale expands and the product mix upgrades toward advanced nodes, there is room for subsequent gross margin improvement; fourth, Goldman Sachs maintains its Buy rating and assigns a 12-month target price of Rmb381 based on a 36.3x 2027E target P/E.

Analysis framework

The report analyzes the company based on its 1Q26 results, revisions to 2025-2028E earnings forecasts, growth trends by business segment, changes in product mix, and valuation correlations with peers. Valuation uses a 2027E target P/E multiple and links the target multiple to the correlation between peers’ average net profit growth in 2027-2028E and their 2027E P/E.

Methodology notes

• Valuation methodsTarget P/E valuation

  36.3x 2027E target P/E

  The 12-month target price of Rmb381 is based on an unchanged 36.3x 2027E target P/E; this target multiple is derived from the correlation between peers’ average net profit growth in 2027-2028E and their 2027E P/E, and it is within the company’s average forward P/E range since December 2020.

• Factor analysisGS Factor Profile

  Growth, Financial Returns, Multiple, and Integrated percentile comparisons

  Goldman Sachs Factor Profile compares a stock with the market and industry peers across growth, financial returns, valuation multiples, and integrated percentiles to provide investment context.

• M&A frameworkM&A Rank

  M&A likelihood score from 1 to 3

  Goldman Sachs uses qualitative and quantitative factors to assess the likelihood that a company could become an acquisition target; a score of 1 represents high probability, 2 medium probability, and 3 low probability. The report does not indicate that this framework had a core impact on the target price in this case.

Asset mapping & comparison

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

• Anji Micro (688019.SS)

  Covered name; Goldman Sachs maintains Buy rating

  Strengths

  Comprehensive CMP slurry coverage, strong growth in wet chemicals, a breakthrough in Damascene ECP, and potential to expand into new materials and advanced process node applications.

  Weaknesses

  1Q26 gross margin came in below expectations, net profit was 18% below expectations, and product mix changes are creating short-term margin pressure.

  Comparison

  Wet chemicals grew 64% YoY in 2025, faster than CMP slurry’s 32% YoY growth; the target P/E multiple references the correlation between peers’ 2027-2028E net profit growth and 2027E P/E.

  Risks

  Supply chain risks, weaker semiconductor customer demand, and slower-than-expected product expansion.

Key data

• 1Q26 revenueRmb724m, up 33% YoY2% below Goldman Sachs expectations, broadly in line overall.
• 1Q26 gross margin55.5%2.7 percentage points below expectations and below 4Q25’s 57.0%.
• 1Q26 net profitRmb208m, up 23% YoY18% below Goldman Sachs expectations.
• 2025 wet chemicals growthup 64% YoYFaster than CMP slurry’s 32% YoY growth.
• Expected global market sizeWet chemicals US$6bn, ECP US$1bnTECHCET’s projected 2029 market size.
• 2026E earnings revisioncut by 3%Mainly due to lower-than-expected gross margin caused by product mix changes.
• 2027E and 2028E earningslargely unchangedThe report expects upgraded product mix at advanced nodes to support gross margin improvement.
• Target priceRmb381Previously Rmb380, based on a 36.3x 2027E target P/E.

Impact & implications

The report’s investment implication for Anji Micro is positive overall: the company’s short-term margins are pressured by a higher contribution from wet chemicals, but new products, new applications, and improved customer penetration are expected to broaden revenue sources; if economies of scale in wet chemicals and continued volume ramp-up of early-stage ECP products materialize, while upgraded product mix for advanced process nodes drives gross margin improvement, valuation and earnings expectations should remain supported.

Risks

• Supply chain risks.
• Semiconductor customer demand weaker than expected.
• Product expansion weaker than expected.
• A higher contribution from wet chemicals may continue to depress short-term gross margin.
• Volatility in non-operating items may affect net profit delivery.

What to watch

• The pace of scale ramp-up and gross margin improvement in the wet chemicals business.
• Progress of Damascene ECP from early breakthrough to revenue contribution.
• Customer penetration of CMP slurry in new applications and advanced nodes.
• Whether 2026E gross margin recovers from product mix pressure.
• Semiconductor customer demand and supply chain stability.
• Whether subsequent company results support the 36.3x 2027E target P/E.