JPMorgan: AMEC (688012.SS) — Building a WFE Platform to Empower the Domestic AI Supply Chain; Reiterate Overweight
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
JPMorgan reiterates an Overweight rating on AMEC (688012.SS), raising its December 2026 target price from RMB 352 to RMB 380. The firm notes that sentiment in China's wafer fabrication equipment (WFE) market has improved rapidly, driven by successful IPOs among AI chipmakers and CXMT's anticipated listing amid a memory upcycle. Domestic WFE companies are expected to continue benefiting from sustainable capital expenditure supporting local AI demand in advanced logic and memory through 2026-2027.
AMEC is actively transitioning into a platform company, highlighted by its acquisition of a 64.69% stake in Hangzhou Sizone, a CMP equipment specialist. While the immediate financial impact is limited, the move strategically expands AMEC's product portfolio. JPMorgan projects AMEC's 2025-2027 revenue and earnings CAGRs at 49% and 66%, respectively. Q4 2025 revenue is forecast at RMB 5.751 billion, with full-year 2026 revenue reaching RMB 22.461 billion.
The target price increase is underpinned by a higher valuation multiple of 32x one-year forward P/E, aligning with A-share peers. This valuation re-rating for domestic WFE plays could be sustained over the next two to three years due to rising localization rates and reduced cyclicality. Key risks include tighter US restrictions on critical component procurement and potential disruptions in capacity expansion or customer purchasing driven by downstream demand weakness.