AMEC’s 2Q26 Results in Line with Guidance; Memory and Logic Capex to Drive 2H26 Order Momentum

Overview

This report reviews AMEC’s 2Q26 results and progress in orders and capacity, and adjusts earnings forecasts and the target price accordingly. Goldman Sachs’ core view is that near-term R&D investment and component supply will create pressure, but rising capex related to advanced logic, memory, and generative AI, together with product and capacity expansion, will support orders in 2H26 and medium- to long-term earnings growth.

Core views

AMEC’s 2Q26 revenue and net profit were approximately RMB3.8 billion and RMB1.87 billion, respectively, both broadly in line with the midpoint of company guidance. Capex by advanced logic and memory customers supported revenue performance, while higher investment income boosted non-operating income. However, operating profit was 21% below Goldman Sachs’ forecast and 29% below Bloomberg consensus because R&D investment was higher than expected. Goldman Sachs believes that although higher R&D spending depresses near-term profit, it benefits subsequent product development and long-term growth. Regarding orders, management is positive about the upward trend in global wafer fab equipment spending, believing that the generative AI trend will drive investment in advanced processes, and expects AMEC to achieve solid order growth in 2H26E. As a leading domestic supplier of semiconductor process equipment, the company is expanding from etching and deposition equipment into platform-based solutions such as CMP, metrology, and advanced packaging to capture incremental customer demand. Goldman Sachs therefore concludes that advanced logic and memory capex, advanced process upgrades, and high-end product expansion will jointly underpin order growth. Product and capacity expansion are progressing simultaneously. The company entered the high-aspect-ratio etching equipment field relatively early and has accumulated relevant innovative technologies and experience. It is currently collaborating with multiple customers to develop a new-generation 90:1 high-aspect-ratio etcher, which management expects to ramp gradually in 2027E. In terms of capacity, Phase I of the Shanghai Lingang facility has begun mass production, while Phase II is in the planning stage. The Nanchang, Guangzhou, and Chengdu facilities are also expanding capacity to meet growing customer demand. Meanwhile, management noted that components for semiconductor process equipment remain under pressure in the near term, and the company is working closely with overseas and local suppliers to ensure equipment deliveries. After incorporating the 2Q26 results, Goldman Sachs raises its 2026-28E earnings forecasts by 0.8%, 0.4%, and 1.1%, respectively. The revenue forecasts are raised mainly to reflect solid spending by advanced logic and memory customers, higher advanced-equipment revenue, and an expanded product range; gross margin forecasts are broadly unchanged. To reflect the higher R&D spending required for product development, Goldman Sachs raises its 2026E and 2027E operating expense ratio forecasts by 0.2 to 0.5 percentage points, while also raising its non-operating income forecasts due to higher-than-expected investment income. The model forecasts revenue of RMB17.003 billion, RMB23.100 billion, RMB29.723 billion, RMB38.342 billion, RMB48.694 billion, and RMB59.407 billion from 2026E to 2031E, respectively, corresponding to year-over-year growth of 37%, 36%, 29%, 29%, 27%, and 22%. Gross margins over the same period are forecast at 41.8%, 43.9%, 44.8%, 44.9%, 44.9%, and 44.9%. The operating expense ratio is forecast to decline from 23% to 17%, followed by 14%, 14%, 14%, and 14%, while the operating margin is forecast to rise from 19% to 27%, 30%, 31%, 31%, and 31%. Net profit is forecast at RMB5.251 billion, RMB6.062 billion, RMB8.342 billion, RMB10.690 billion, RMB13.612 billion, and RMB16.134 billion, respectively, representing year-over-year growth of 149%, 15%, 38%, 28%, 27%, and 19%. Earnings per share are forecast at RMB5.52, RMB6.33, RMB8.71, RMB11.16, RMB14.21, and RMB16.84. On valuation, Goldman Sachs slightly raises its 12-month target price from RMB576 to RMB577 and maintains its “Buy” rating. The target price remains based on a discounted P/E methodology: an unchanged target P/E of 56x 2030E earnings is discounted back to 2027E using an unchanged 11% cost of equity. The report states that the target multiple is benchmarked against the relationship between global peers’ P/E multiples and earnings growth, primarily based on peers’ 2027E P/E multiples and 2027-28E year-over-year net profit growth. The valuation summary also links peer P/E multiples to the sum of net profit growth and operating margins. Goldman Sachs believes that higher earnings growth and the prospect of sector re-rating driven by semiconductor capacity expansion and advanced process upgrades support this target multiple. Key downside factors include an expansion of trade restrictions to mature processes, constraints on the company’s ability to supply advanced etching equipment usable in overseas 5-nanometer production lines, and weaker-than-expected capex by major Chinese wafer fabs. Component supply pressure could also weaken the pace at which orders convert into revenue if it affects equipment deliveries.

Analysis framework

Goldman Sachs first compares 2Q26 revenue, net profit, and operating profit with company guidance, its own forecasts, and Bloomberg consensus, and then assesses the growth trajectory using information on orders, products, capacity, and the supply chain disclosed during the earnings call. The report subsequently translates advanced logic and memory capex and demand for advanced processes driven by generative AI into revenue forecasts, while adjusting assumptions for R&D expenses and investment income. Finally, it determines the target P/E multiple based on the relationship between global peers’ P/E multiples and earnings growth, and discounts it using the cost of equity to derive the 12-month target price.

Methodology notes

• Valuation MethodologyP/E and PEG Valuation

  Discounted P/E valuation calibrated to peer growth correlations

  The report determines AMEC’s target multiple based on the relationship between global peers’ P/E multiples and earnings growth. It applies a 56x P/E multiple to 2030E earnings and discounts it back to 2027E using an 11% cost of equity, resulting in a 12-month target price of RMB577.

• Industry/Sector Analysis FrameworkSupply-demand framework

  Transmission from capex to equipment demand and order growth

  Starting from demand for advanced processes driven by generative AI, the report concludes that capex by memory and logic customers will increase wafer fab equipment demand, and then combines this with AMEC’s product and capacity expansion to derive order growth in 2H26E and subsequent revenue growth.

Asset mapping & comparison

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

• AMEC (688012.SS)

  Rising capex related to advanced logic, memory, and generative AI is expected to increase orders for the company’s semiconductor process equipment, while product platform and capacity expansion provide further support for growth.

  Strengths

  A leading domestic supplier of semiconductor process equipment that entered the high-aspect-ratio etching field relatively early and is expanding from etching and deposition equipment into solutions such as CMP, metrology, and advanced packaging.

  Weaknesses

  Higher R&D investment depresses near-term operating profit, while semiconductor equipment component supply also faces short-term pressure.

  Comparison

  The target P/E multiple is benchmarked against the relationship between global peer valuations and earnings growth. Goldman Sachs believes the company’s higher earnings growth and prospects for sector re-rating support a 56x 2030E P/E multiple.

  Risks

  Expansion of trade restrictions, constraints on advanced etching equipment supply, weaker-than-expected capex by major Chinese wafer fabs, or component pressure affecting deliveries.

Key data

• 2Q26 RevenueRMB3.8 billionBroadly in line with the midpoint of company guidance
• 2Q26 Net ProfitRMB1.87 billionBroadly in line with the midpoint of company guidance, supported by higher investment income
• 2Q26 Operating Profit Variance21% below Goldman Sachs’ forecast and 29% below Bloomberg consensusMainly due to higher-than-expected R&D expenses
• 2026-28E Earnings Forecast Revisions+0.8% / +0.4% / +1.1%Incorporates the 2Q26 results and raises advanced-equipment revenue and non-operating income
• 2026E-2031E RevenueRMB17.003 billion / RMB23.100 billion / RMB29.723 billion / RMB38.342 billion / RMB48.694 billion / RMB59.407 billionCorresponding to year-over-year growth of 37% / 36% / 29% / 29% / 27% / 22%
• 2026E-2031E Net ProfitRMB5.251 billion / RMB6.062 billion / RMB8.342 billion / RMB10.690 billion / RMB13.612 billion / RMB16.134 billionCorresponding to year-over-year growth of 149% / 15% / 38% / 28% / 27% / 19%
• 2026E-2031E Earnings per ShareRMB5.52 / RMB6.33 / RMB8.71 / RMB11.16 / RMB14.21 / RMB16.84Goldman Sachs financial model forecasts
• Target Valuation56x 2030E P/EDiscounted back to 2027E using an 11% cost of equity, with the target multiple unchanged from the previous estimate
• 12-Month Target PriceRMB577Previously RMB576

Impact & implications

Goldman Sachs believes AMEC’s growth thesis is shifting from reliance on individual equipment offerings to joint drivers comprising a platform-based product portfolio, advanced process demand, and capacity expansion across multiple locations. R&D investment depresses operating profit in the near term, but if the 90:1 high-aspect-ratio etcher and other high-end equipment ramp as planned, product expansion could support revenue growth and margin improvement. This view remains dependent on customer capex, supply-chain stability, and continued deliveries of advanced equipment.

Risks

• If trade restrictions expand from their current scope to mature-process wafer fabs, demand for AMEC’s products could decline further.
• Constraints on the company’s ability to supply advanced etching equipment usable in overseas 5-nanometer production lines would pose additional downside risk.
• Capex by major Chinese wafer fabs could be weaker than expected.
• Near-term supply pressure on semiconductor process equipment components could affect equipment deliveries.

What to watch

• Whether the company can achieve solid order growth in 2H26E as management expects.
• Actual growth in advanced logic, memory, and global wafer fab equipment capex.
• Progress in collaboration with multiple customers on the 90:1 high-aspect-ratio etcher and whether it can ramp gradually in 2027E.
• Capacity expansion progress for Shanghai Lingang Phase II and the Nanchang, Guangzhou, and Chengdu facilities.
• Whether overseas and local suppliers can alleviate component pressure and ensure equipment deliveries.