Montage Technology - H: Continue to Benefit from Rising AI Capex
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
UBS maintains a Buy rating on Montage Technology-H (6809.HK) with a 12-month target price of HK$237.00, reflecting a valuation of 54x 2027E earnings. The company's 2025 full-year results aligned with expectations, generating revenue of RMB 5.5 billion, up 50% year-on-year, and a net profit of RMB 2.2 billion, representing a 58% surge.
In the fourth quarter, revenue slightly dipped by 1.8% quarter-on-quarter to RMB 1.4 billion, primarily constrained by tight BT substrate supplies, which caused a 5% sequential decline in the interconnect business. Despite this, gross margin expanded by 1.2 percentage points quarter-on-quarter to 64.5%, driven by favorable product mix improvements.
Montage Technology is aggressively advancing its next-generation interconnect product pipeline. Key 2026 milestones include completing engineering development for DDR5 Gen6 RCD and MRCD/MDB Gen3, initiating DDR6 Gen1 RCD engineering, and achieving mass production for PCIe 6.x Retimer solutions. UBS projects earnings growth of 41% and 51% for 2026 and 2027, respectively. This expansion is underpinned by robust server memory module growth, ongoing DDR5 RCD generational iterations, accelerating MRCD/MDB volume, and new product introductions. Key downside risks encompass potential downturns in the semiconductor cycle, slower-than-expected MRDIMM server CPU platform ramps, and intensifying PCIe Retimer competition.