UBS First Read: Advanced Micro-Fabrication Equipment Q1 2026 - Better-than-Expected Gross Margin
Summaries are public. PDF access requires an active membership; all members have the same access. Sign in
Advanced Micro-Fabrication Equipment reported first-quarter 2026 revenue of RMB 2.92 billion, representing a 34% year-on-year increase and a 33% sequential decline. This sequential drop aligns closely with the three-year seasonal average of a 31% decline, indicating revenue performance matched seasonal expectations.
Reported net profit reached RMB 930 million, though this included a non-recurring gain of RMB 397 million from the disposal of shares in Piotech. Excluding this item, recurring net profit stood at RMB 478 million, up 60% year-on-year and broadly in line with the UBS estimate of RMB 474 million.
Notably, the gross margin exceeded expectations, coming in at 39.9% compared to the forecasted 38.8%. The year-on-year margin contraction of 1.6 percentage points was primarily attributed to one-time customer certification costs for new products. However, the sequential improvement of 0.6 percentage points suggests that competitive pricing pressure remains limited.
The company continues to advance its technological leadership. Shipments of high-end products for advanced logic and memory manufacturing have increased significantly. Additionally, next-generation etching equipment, including ultra-high aspect ratio CCP tools and ICP tools for 3D DRAM, have been dispatched to leading domestic customers for certification.
Inventory levels remained stable, indicating a solid order book. UBS maintains a Buy rating with a target price of RMB 405.00, based on 44 times 2027 estimated earnings.