Upgrading AMEC Company Target Price to 513.30 Yuan, Anticipating Domestic Memory Expansion Dividends

Overview

HSBC Qianhai Securities released an earnings review for AMEC Company, upgrading earnings forecasts and target price. The core logic is the equipment demand dividend from the domestic memory capacity expansion cycle. The report focuses on capacity expansion expectations from YMTC and CXMT IPOs, and AMEC's technological advantage in etching equipment. The report adopts PE valuation method, based on 45% net profit CAGR forecast, assigning a target PE of 80.5x.

Core views

The research report believes that as a leading domestic semiconductor equipment company, AMEC Company will significantly benefit from the domestic memory capacity expansion cycle: Demand Side: YMTC and CXMT plan to IPO and raise funds for capacity expansion. It is expected that domestic memory demand will account for 30%/25% globally in 2026-27, while localization rate is only 13%/8%, presenting a significant gap. The current memory price uptrend provides a window for expansion. Technological Advantage: AMEC leads in etching equipment technology; its CCP etcher can achieve 90:1 deep silicon etching, and ICP etcher can handle 3D DRAM's 140:1 high aspect ratio etching requirements, supporting 60% revenue from domestic high-end memory sector. Financial Adjustments: Due to differences in technical validation progress, increase 2026-27 etching equipment revenue forecast by 7%/22%, reduce MOCVD equipment forecast, add 2028 earnings forecast. Increased R&D investment compresses short-term gross margin but helps long-term competitiveness improvement.

Analysis framework

Report adopts top-down analysis framework: 1. Industrial Trend Judgment: Confirm domestic memory capacity gap through supply-demand analysis 2. Technology Competitiveness Verification: Decompose etching equipment technical parameters and market share relationship 3. Financial Modeling: Predict revenue by business line (etching/deposition equipment, etc.) and gross margin changes 4. Valuation Benchmarking: Adopt PE valuation method, adjust target multiple based on historical average PE and earnings growth Special attention given to structural opportunities of improving equipment localization rate, verify enterprise competitiveness through technical parameter verification, and determine equipment procurement windows combined with industry capital expenditure cycles.

Methodology notes

• Valuation MethodPE Valuation

  PE Valuation Method

  Adjust target PE to 80.5x through historical average P/E (58.3x) and earnings growth (45%), reflecting market valuation premium for high-growth enterprises

• Industry/Industrial Analysis FrameworkSupply-demand framework

  Memory Supply/Demand Pattern Analysis

  Derive capacity gaps and equipment procurement demand by comparing global memory demand share (China 30% NAND/25% DRAM) and localization rate (13%/8%)

Asset mapping & comparison

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

• AMEC Company (688012.SS)

  Benefits from domestic memory capacity expansion

  Strengths

  Etching equipment technology leads, ICP/CCP etching capability reaches international levels

  Weaknesses

  Dependent on imported core parts for some items, MOCVD equipment demand lower than expected

  Comparison

  Significant valuation premium compared to peers, but performance growth more certain

  Risks

  Fab investment falls below expectations, technology substitution risk, R&D progress lag

Key data

• Target Price Adjustment513.30Up 45% from previous, corresponds to 80.5x PE
• 2026 Net Profit Forecast64.85 Hundred Million7% higher than market expectation
• Etching Equipment Revenue Share60%Mainly from YMTC/CXMT high-end memory lines
• ICP Etching Capability140:1 HAR3D DRAM Manufacturing Key Parameter

Impact & implications

The report believes AMEC Company will significantly benefit from the domestic memory capacity expansion cycle, expected 2026-27 etching equipment revenue growth 22%/16%. But monitor fab capital expenditure rhythm, core component localization process, and R&D return cycle impact on short-term profitability.

Risks

• Domestic fab investment falls below expectations
• Key component localization受阻
• R&D return cycle extended

What to watch

• YMTC/CXMT capacity construction progress
• ICP etching equipment market share changes
• ALD equipment validation progress