Cambricon Technology Corporation: Risk Reward Update

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Cambricon Technology Corporation: Risk Reward Update

UpdateM

RiskRisk RewardReward– Cambricon- CambriconTechnology CorporationTechnology(688256.SS)Corporation

(688256.SS)Stronger AI semi demand amid improving supply visibility

PRICE TARGET Rmb1,342.28 OVERWEIGHT THESIS

Key valuation assumptions underpinning our model include: an 8.4% cost of equity (derived ▪Cambricon has deep engagement with

from a beta of 1.06, risk-free rate of 2.0%, and equity risk premium of 6.0%), a long-term major CSPs with proven product-market fit.

payout ratio of 57%, a medium-term growth rate of 16%, and a terminal growth rate of 6.0%. MLU590 is widely deployed in SAD

workloads, supporting strong order visibility Rmb1,353.96

as AI infrastructure scales.

Consensus Price Target Distribution Rmb1,116.51 Rmb1,614.77 supply chain transition is MS PT ▪Domestic

underway, with production shifting to SMIC.Source: Refinitiv, Morgan Stanley Research Mean Morgan Stanley Estimates

Yields remain a challenge, but we expect

gradual improvement through 2026.

▪Aggressive product roadmap, with next-

RISK REWARD CHART generation MLU690 expected in 4Q26,

potentially boosting performance ~2.2x and

sustaining technology leadership.

CNY

Rmb2,536.79Rmb2,536.79(+86.20%)Rmb2,536.79(+86.20%)(+86.20%) ▪P/E and P/S multiples are elevated in

absolute terms, but we find them justified

2400 by superior growth profile, improving supply

visibility, and strong positioning as a key

domestic AI chip supplier.

Consensus Rating Distribution

Rmb1,362.41Rmb1,362.41Rmb1,362.41 Rmb1,342.28Rmb1,342.28(-1.48%)Rmb1,342.28(-1.48%)(-1.48%)

1200 88% Overweight

13% Equal-weight

600 0% Underweight

Rmb676.21Rmb676.21(-50.37%)Rmb676.21(-50.37%)(-50.37%) MS Rating

Source: Refinitiv, Morgan Stanley Research

MAY '25 NOV '25 MAY '26 MAY '27