Earnings forecasts and valuation
Factoring in the pace of advanced packaging order delivery and delayed HBM investment, we cut our 2026/2027/2028 revenue forecasts by 2%/4%/4% to HKD19.61/23.97/27.04bn. Incorporating a better product mix and adjusted expense and tax rate assumptions, we revise our attributable net profit forecasts by +8%/-3%/-11% to HKD1.83/2.78/3.67bn, up 103%/52%/32% YoY, implying EPS of HKD4.4/6.6/8.7. Given improved order visibility for TCB and optical communications, balanced against uncertainty over advanced packaging order conversion and HBM investment timing, we apply a 27x 2027E PE, vs 25.5x for comparable companies on Bloomberg consensus. The valuation premium reflects the company's technological leadership and growth potential in advanced packaging and optical communications equipment. We cut our target price to HKD180 (previous: HKD205). Maintain BUY.
Risks: semiconductor industry downturn, slower adoption of new technologies than we expect, and intensifying trade frictions.