SMIC | 2025 Annual Report Review: Continued Performance Growth, Platformization Strategy Accelerating Implementation

MaticHoleFiller · 2026-04-06T21:51:25+00:00

Dongwu Machinery is expected to achieve revenue of 12.39 billion yuan and net profit attributable to shareholders of 2.11 billion yuan in 2025, representing year-over-year growth of 36.6% and 30.7%, respectively. The company continues to advance the research and development of etching and thin film equipment to enhance market competitiveness and has acquired Hangzhou Zhonggui to expand into the wet process CMP field. Maintain a "Buy" rating, but attention should be paid to risks related to wafer fab capacity expansion and new product development.

MaticHoleFiller

2026-04-06 21:51:25

Abstract generation in progress

（Source: A New Perspective on Advanced Manufacturing）

【East Wu Machinery】Zhou Ershuang 13915521100 / Li Wenyi 18867136239 / Wei Yijie / Qian Yaotian / Huang Rui / Tan Yixin 17851090557 / Tao Ze

Investment Rating: Buy (Maintained)

1 Steady revenue & performance growth; thin-film products continue to ramp up

In 2025, the company’s revenue was RMB 12.39 billion, up 36.6% year over year. Revenue from etching equipment was RMB 9.83 billion, up 36.6% year over year; revenue from LPCVD equipment was RMB 0.51 billion, up 224.2% year over year. Net profit attributable to the parent company was RMB 2.11 billion, up 30.7% year over year; non-recurring profit net profit was RMB 1.55 billion, up 11.6% year over year. In Q4, single-quarter revenue was RMB 4.32 billion, up 21.5% quarter over quarter and 39.3% year over year; net profit attributable to the parent company was RMB 0.90 billion, up 28.1% quarter over quarter and 78.2% year over year. Non-recurring profit net profit attributable to the parent company was RMB 0.66 billion, up 13.8% quarter over quarter and 88.6% year over year.

2 Gross margin slightly declined; R&D investment & efficiency improved significantly

In 2025, the company’s consolidated gross margin was 39.2%, down 1.9 percentage points year over year; net profit margin was 16.7%, down 1.1 percentage points year over year; non-recurring profit net margin was 12.5%, down 2.8 percentage points year over year. The period expense ratio was 27.5%, up 2.2 percentage points year over year. Among them, the selling expense ratio was 4.0%, down 1.3 percentage points year over year; the management expense ratio was 3.9%, down 1.5 percentage points year over year; the finance expense ratio was -0.4%, up 0.6 percentage points year over year; the R&D expense ratio was 20.0%, up 4.3 percentage points year over year. Period R&D investment was RMB 3.74 billion, up 52.7% year over year. In Q4, single-quarter gross margin was 39.3%, flat year over year / up 1.4 percentage points quarter over quarter; net profit margin was 20.4%, up 0.7 percentage points year over year and up 4.5 percentage points quarter over quarter; non-recurring profit net margin was 15.3%, down 0.9 percentage points year over year and up 4.1 percentage points quarter over quarter.

3 Inventory & contract liabilities grew steadily; orders on hand are sufficient

As of end of 2025 Q4, the company’s contract liabilities were RMB 3.04 billion, up 17.7% year over year; inventory was RMB 7.17 billion, up 1.9% year over year. In 2025, the company’s operating cash flow was RMB 2.30 billion; in Q4 single quarter, it was RMB 1.00 billion, with stable cash flow.

4 Platform-based expansion continues to advance, covering core processes such as etching, thin films, and metrology

(1) Etching equipment: ① CCP equipment: A 60:1 ultra-high aspect ratio dielectric etching equipment has become a standard domestic configuration; mass production targets are improving steadily, and the next-generation 90:1 ultra-high aspect ratio dielectric etching equipment is about to enter the market. ② ICP equipment: Good progress has been made in the development of next-generation ICP etching equipment and chemical vapor etching equipment for logic and storage customers. ③ High-selectivity equipment: At SEMICON in 2026, Primo Domingo high-selectivity etching equipment was released, fully meeting next-generation GAA logic, 3D NAND, and DRAM high-selectivity etching demand. (2) Thin-film deposition equipment: Multiple thin-film equipment types, including LPCVD, PECVD, ALD, and EPI, have successfully completed validation with multiple advanced logic and storage customers, and have been entering mass production in sequence; the company is also concurrently promoting the development of multiple CVD, ALD, and PVD solutions, continuously improving the coverage rate of thin-film products. (3) Metrology equipment: A subsidiary, Chaowei Company, was established. It introduced leading talent for electron-beam inspection equipment; electron-beam inspection equipment is expected to accelerate deployment.

5 Acquisition of Hangzhou Zhonggui to enter the wet CMP domain

The plan is to purchase Hangzhou Zhonggui through the issuance of shares; the final transaction price is RMB 1.57 billion. Zhonggui’s 12-inch large silicon wafer equipment has been delivered in batches to domestic top-tier manufacturers. The company’s technical strength is strong. This acquisition aims to enhance Micro/Wei’s competitiveness in complete process solutions and end-to-end coverage. Zhonggui has committed that the company will achieve consolidated revenue of RMB 0.28 / 0.43 / 0.58 billion for 2026–2028, respectively.

Earnings forecasts and investment rating

Given that validation cycles for downstream semiconductor manufacturers are relatively long, we adjust the company’s net profit attributable to the parent for 2026–2027 to RMB 2.73 (original value 3.41) / RMB 3.46 (original value 4.46) billion. We expect net profit attributable to the parent in 2028 to be RMB 4.26 billion. The current market capitalization implies dynamic PE ratios of 73/57/47 times, respectively. Considering that capital expenditure at downstream wafer fabs will continue to grow, and the company’s platform-based expansion continues to advance, we maintain the “Buy” rating.

Risk disclosures

Wafer fab expansion pace may be slower than expected; R&D and industrialization of new products may be slower than expected, etc.

East Wu Machinery Team

East Wu Machinery Research Team Honors

2024 New Fortune Best Analyst — Machinery Industry — 4th place

2024 Wind Gold Medal Analyst — Machinery Industry — 1st place

2023 New Fortune Best Analyst — Machinery Industry — 4th place

2023 Wind Gold Medal Analyst — Machinery Industry — 1st place

2022 New Fortune Best Analyst — Machinery Industry — 3rd place

2022 Wind Gold Medal Analyst — Machinery Industry — 2nd place

2021 New Fortune Best Analyst — Machinery Industry — 3rd place

2021 Wind Gold Medal Analyst — Machinery Industry — 1st place

2020 New Fortune Best Analyst — Machinery Industry — 3rd place

2020 Sell-side Analyst Crystal Ball Award — Machinery Industry — 5th place

2019 New Fortune Best Analyst — Machinery Industry — 3rd place

2017 New Fortune Best Analyst — Machinery Industry — 2nd place

2017 Taurus Award Best Analyst — High-end Equipment Industry — 2nd place

2017 Sell-side Analyst Crystal Ball Award — Machinery Industry — 5th place

2017 Annual Excess Return First in the Monthly Portfolio — Machinery Industry

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