HSBC maintains its Buy rating on NAURA Technology and significantly raises the target price to RMB1,031.90

Overview

This is a company research report on NAURA Technology published by HSBC Qianhai Securities Limited. The report's core view is that domestic semiconductor equipment capital expenditure is spreading from memory customers to advanced logic and glass substrate applications. Although the company is facing short-term pressure from gross margin and expense expansion, its medium- and long-term revenue and profit growth momentum remains strong. HSBC therefore maintains its Buy rating and significantly raises the target price.

Core views

The report believes that concerns over the post-first-quarter gross margin trend and the company's relatively low exposure to memory customer revenue have caused its share price to lag the semiconductor equipment index. However, HSBC believes that the company's broad product portfolio and platformization strategy will help it capture incremental orders from memory, logic, and glass substrate customers. Near-term earnings forecasts were lowered due to rising personnel, R&D, and administrative expenses, but these investments should improve R&D capabilities and service quality, supporting growth over a longer cycle.

Analysis framework

The analytical framework combines earnings forecast revisions, revenue growth assumptions, gross margin and expense ratio adjustments, peer valuation comparisons, and PS target-multiple valuation. As operating expenses during the expansion phase have a significant impact on net profit, the report continues to use revenue and the PS multiple as the primary valuation anchors, while referencing global peer average revenue growth and valuation rerating.

Methodology notes

• Valuation methodsPS multiple valuation

  The target price of RMB1,031.90 is derived by multiplying forecast 2027 revenue per share of RMB88.20 by the target PS multiple of 11.7x.

  The report believes that the company's revenue CAGR of approximately 27% from 2026 to 2028 is broadly in line with the global peer average of 26%, and therefore uses the global peer average PS multiple as a reference.

• Earnings forecastsForecast revisions and sensitivity analysis

  Lowering 2026 to 2027 EPS and net profit forecasts while introducing 2028 revenue and net profit forecasts.

  The revisions primarily reflect gross margin dilution from the consolidation of Kingsemi, pricing competition in certain areas, and rising personnel, R&D, and administrative expenses during the expansion phase.

• Industry comparisonRelative performance and peer rerating

  Comparing the company's share price gain, the gain in the Wind Semiconductor Equipment Index, and global peer revenue growth.

  The report believes that rapidly growing computing demand has driven a rerating of the semiconductor equipment sector as a whole, while the company's relative underperformance leaves room for further upside.

Asset mapping & comparison

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

• NAURA Technology (002371.SZ)

  Core covered asset

  Strengths

  Broad product portfolio covering demand for memory, advanced logic, and glass substrate-related equipment; domestic semiconductor capital expenditure expansion provides order opportunities; high R&D and personnel investment should strengthen long-term competitiveness.

  Weaknesses

  Higher operating expenses during the expansion phase, consolidation of Kingsemi, and pricing competition in certain areas may depress gross margins; exposure to memory customer revenue is relatively lower than that of some peers.

  Comparison

  The share price rose 57% over the past two months, below the 72% gain in the Wind Semiconductor Equipment Index; forecast revenue CAGR is broadly in line with the global peer average.

  Risks

  Slower domestic semiconductor equipment capital expenditure, new equipment R&D progress below expectations, and glass substrate design wins or investment below expectations.

• Wind Semiconductor Equipment Index

  Relative performance benchmark

  Strengths

  The sector has performed strongly, driven by a rerating of domestic semiconductor equipment capital expenditure and computing demand.

  Weaknesses

  Following the substantial sector gain, valuations are more sensitive to demand realization and order sustainability.

  Comparison

  The report states that the index rose 72% over two months, exceeding NAURA Technology's 57% gain over the same period.

  Risks

  If semiconductor capital expenditure expectations are revised downward, sector valuations may come under pressure.

Key data

• RatingBuyRating maintained.
• Target priceRMB1,031.90Previous target price was RMB528.40.
• Current share priceRMB841.82Closing price as of July 2, 2026.
• Implied upside+22.6%Target price relative to current share price.
• Forecast 2026 to 2028 revenue CAGR27%The report states that this is broadly in line with the global peer average of 26%.
• Forecast 2026 to 2028 net profit CAGR43%Higher than the previous forecast of a 31% net profit CAGR from 2025 to 2027.
• 2028 revenue forecastRMB81,302mNew 2028 forecast introduced in this report.
• 2028 net profit forecastRMB14,204mNew 2028 forecast introduced in this report.
• 2026 second-quarter sales forecastRMB10.5bnThe report states that this broadly meets market consensus expectations.
• 2026 second-quarter net profit forecastRMB1.6bnNet profit is below market expectations due to higher-than-expected expenses.
• 2026/2027 net profit forecast adjustment-30% / -25%Primarily reflects higher operating expenses during the expansion phase.
• Target PS multiple2027e 11.7xPrevious multiple was 7.5x.

Impact & implications

The report has a positive investment implication for NAURA Technology: short-term expense and gross margin pressure may weigh on profit performance, but if domestic semiconductor capital expenditure continues to expand and the company's new equipment R&D and glass substrate customer penetration progress smoothly, revenue growth and valuation rerating could continue to drive the share price higher. The significant target price increase also implies that the market needs to reassess the growth potential of the company's platform-based product portfolio within the domestic semiconductor equipment chain.

Risks

• Slower domestic semiconductor equipment capital expenditure would affect the company's sales outlook.
• New equipment R&D progress below expectations could constrain revenue growth.
• Glass substrate technology investment, design wins, or customer orders below expectations would pose downside risks to revenue assumptions.
• Kingsemi consolidation, market share competition, and pricing pressure may depress the consolidated gross margin.
• Rising personnel, R&D, and administrative expenses may continue to weigh on short-term net profit.

What to watch

• Progress in the launch of TGV ECP equipment and its potential share price catalysis.
• Whether domestic memory and advanced logic customers continue to raise capital expenditure.
• Changes in the expense ratio and R&D output after adding 4 to 5 thousand employees in 2026.
• Gross margin performance following the consolidation of Kingsemi.
• Design wins and order execution by glass substrate-related customers.
• The extent to which the 2026 second-quarter revenue forecast of RMB10.5bn and net profit forecast of RMB1.6bn are achieved.