E-Town Semis (688729.SS): Riding on memory and advanced node capacity expansion in local market; maintain Neutral on fair valuation

研报英文原文证据摘录

E-Town Semis (688729.SS): Riding on memory and advanced node capacity expansion in local market; maintain Neutral on fair valuation

Equity Research

10 July 2026 | 10:11AM HKT

E-Town Semis (688729.SS): Riding on memory and advanced node

capacity expansion in local market; maintain Neutral on fair valuation

We remain positive on the China Semi supply chain, riding on rising advanced node Allen Chang

+852-2978-2930 |

capacity expansion and the generative AI trend supporting China semis ecosystem allen.k.chang@gs.com

Goldman Sachs (Asia) L.L.C.

development. Media reports (Link) of a long-term supply agreement between CXMT

Verena Jeng

and Tencent for server DRAM chips indicate strong demand from local clients and +852-2978-1681 | verena.jeng@gs.com

mix upgrade towards high-end applications. We expect E-Town to benefit from the Goldman Sachs (Asia) L.L.C.

Yifan HuChina Semi capex uptrend, along with its supply chain switching to China suppliers, +852-2978-0996 | yifan.hu@gs.com

driving the company’s revenue growth and profitability improvement. The Goldman Sachs (Asia) L.L.C.

company’s 1Q26 GM was higher than our estimate, representing 3 consecutive

quarters with GM over 40%, while 1Q26 revenue was lower than our estimate, which

we attribute to new products’ ramp up taking more time. We maintain our Neutral

rating as we believe the positives are largely priced in.

Earnings revision: We factor in E-Town’s 4Q25 and 1Q26 results and revise down

our 2026E net income by 5%, mainly on lower revenues. We lower our 2026E revenue

to reflect the 1Q26 revenue miss due to new products’ ramp up taking more time,

but raise 2027-28E revenues as we expect E-Town to benefit from memory and

advanced node capacity expansion in the local market. We raise our 2026-28E GMs