Rating: Neutral (Maintained) | Target Price: RMB 48-63 | Current Price: RMB 65.90 (close on 2026-09-30) | Margin of Safety: -27% (base fair-value floor of RMB 48 vs current price) | Time Horizon: 12 months
Previous report date was 2026-07-24, when the stock traded at RMB 75.51. This report maintains "Neutral," but the nature of the valuation gap has changed — the stock's proactive 13% pullback has narrowed the overvaluation, while downward revisions to core-business earnings expectations and asset-base enrichment have occurred simultaneously.
| Item | Previous (2026-07-24) | Current (2026-10-06) | Drivers of Change |
|---|---|---|---|
| Stance | Neutral | Neutral | Maintained, as the current price of RMB 65.9 is still about 19% above this round's base fair-value center, but catalysts are balanced in both directions |
| Confidence | 0.58 | 0.56 | Divergence narrowed (+26%→+19%) but the realization path is murkier: Q4 validation wrap-up offset by Q3 earnings give-back |
| Target price range | RMB 48-60 | RMB 48-63 | Upper bound raised slightly: IPO proceeds of RMB 779 million received + Piotech stake conversion; per-share asset layer rose from ~RMB 9.4 to RMB 19.16; but the core-business value center was revised down ~18% due to low H1 attainment |
| Valuation verdict | Overvalued | Overvalued (degree narrowed) | Overvaluation narrowed from "+26% above base ceiling" to "+4.6% above base ceiling"; negative expectation gap not yet released |
| Key correction | — | — | The prior report's figure "contract liabilities RMB 1.488 billion (end-2025)" was erroneous; verified actual end-2025 was RMB 183 million and 2026-06-30 was RMB 196 million; corrected throughout this report |
Zhongke Yi is the absolute leader in domestic dry vacuum pumps for integrated circuits (approximately 12.7% domestic market share in 2024, the only domestic vendor achieving volume application in advanced process nodes). Demand-side tailwinds have materially strengthened over the past three months — CXMT's RMB 57.9 billion oversubscribed funds are in place with tenders explicitly prioritizing domestic equipment, YMTC's RMB 33 billion IPO has been accepted, and SEMI forecasts 2026 memory equipment spending +39%. However, the company's 2026H1 revenue grew only +8.52%, dry pump revenue +1.64%, adjusted net profit -3.41%, and Q2 single-quarter revenue turned negative YoY; the "ample order backlog" has yet to show up in financials. At the current price of RMB 65.9, backing out from a core-business EV of RMB 10.46 billion, the market has already priced in the smooth-scenario ramp to ~RMB 300 million of 2028E adjusted net profit (86% of the most optimistic sell-side forecast). Adding the IPO share unlock on 2027-04-29 representing 44.8% of total share capital and the Q3 give-back of Piotech holding fair-value gains (estimated at ~RMB 530 million pre-tax for the quarter, with reported net profit likely turning to a loss), a negative expectation gap will most likely be released over the next two quarters. A good company at a price half a step ahead: do not chase; wait for the Q3 report and unlock-related pressure to create a left-side entry window (near the RMB 48 lower bound of the base range, or even below the event-driven margin-of-safety level of RMB 47) before reassessing positioning.
Among the 14 validated steps, the company is the only domestic vendor with volume application (per prospectus, self-reported, with no third-party tender announcement cross-verification); the remaining 14 must be completed to constitute full-process coverage. Three caveats: ① The wording "completed progressively" carries built-in flexibility; the interim report also discloses that "if testing and validation fall behind schedule, the company may lack delivery capability when customers procure such products"; ② Passing validation does not equal orders — high-end pump tender wins/share disclosures are currently zero; ③ Hanbell Precise Machinery stated in September that its "vacuum pump products have been recognized by multiple domestic chip companies"; while there is no evidence of advanced-node volume, the exclusivity period may be shorter than expected. No validation breakthrough announcements emerged within the Q3 window; Q4 completion is the next hard milestone.
Both sides of the divergence have hard data: On the demand side, CXMT's RMB 57.9 billion oversubscribed funds are in place (listed on 7-27), YMTC's RMB 33 billion IPO was accepted by the SSE on 8-21, and its Phase III project launches volume production at scale in 2026H2; on the supply side, the company's dry pump revenue growth has decelerated continuously from FY2024 +30.5% → FY2025 +6.6% → 2026H1 +1.64%, with Q2 single-quarter revenue at -5.85% (prior-year Q2 base of RMB 390 million). The company's claim of "ample order backlog" is not directly corroborated by contract liabilities (only +7.2%); the +17.6% inventory buildup vs period-start and maintenance/service revenue +70.07% (expanding installed base) provide only indirect support. Sell-side 2026E adjusted profit of ~RMB 210 million (Huayuan: RMB 230 million attributable, fair-value gains assumed at only +RMB 18 million) requires H2 adjusted profit of RMB 149 million = 2.44x H1, ~3.9x the normal seasonal level — unless orders ramp immediately after Q4 validation completion, downgrades are hard to avoid. This is the core zone of divergence between this report and the market.
Of H1 attributable net profit of RMB 1.839 billion (+1,230%), 96.7% was non-recurring, and the RMB 1.956 billion fair-value gain came entirely from Piotech's share price rise. Based on the announced holding of 4.2854 million shares, the RMB 3.274 billion book value at 6-30 implies a cost basis of ~RMB 764/share; Piotech closed at RMB 640 on 9-30, down 32% from its RMB 945 peak, implying Q3 single-quarter fair-value give-back of ~RMB 530 million (pre-tax) — far exceeding core-business single-quarter adjusted profit (~RMB 34 million in Q2). A reported Q3 loss for the quarter is highly likely. From 2027, the profit structure shifts to pure core business (RMB 180-280 million magnitude), with reported YoY declines potentially reaching 65-90%; but the sale authorization is only 1 million shares/12 months, so at this pace over 3 million shares remain by end-2027, and Piotech revaluation noise may persist into 2028. If the market continues to discuss this stock via reported P/E, it will be repeatedly misled.
Q1 blended gross margin of 31.79% (low prior-year base) did not continue into Q2 — Q2 single-quarter estimated at ~25.49%, falling below FY2025's full-year 26.78%; H1 blended 28.08%, flat YoY. The structural distortion in the stabilization: the blended figure's steadiness relies on vacuum instruments (36.57% margin) and surging maintenance services offsetting, while the dry pump core line at 25.11% is the true reading; combined with impairment losses +52.78% YoY (inventory write-downs), actual profit pressure exceeds the headline margin. Three consecutive average price declines, plus foreign players' proactive price cuts in already-supplied segments and Hanbell's IC dry pump entry, mean price-side pressure persists. Watch points: whether dry pump segment gross margin holds 24-25%, and the structural improvement from high-margin segments post-validation completion (segments where foreign players maintain high-price monopolies).
The valuation implication of the current price must be viewed with dual bases side by side: If 2026 adjusted profit follows the actual trajectory of ~RMB 110 million, the 35x exit implies a 2026-2028 adjusted CAGR of ~65%, far above the historical 18.8%; but if 2026 delivers the sell-side RMB 210 million, the implied CAGR is only ~19%, comparable to history — the essence of market pricing is not "expensive multiples," but treating "H2 2026 volume ramp" as a certainty. Per-share cash + financial assets of RMB 19.16 provide a floor (note the floor floats with Piotech's price: every 10% drop in Piotech shrinks the floor by ~RMB 1.2), growth optionality accounts for ~63% of the current price (EPV basis, see valuation chapter), base fair value is RMB 48-63, and the current price is ~19% above the base center.
The unlock size equals 85.7% of the current free float, ~RMB 6.61 billion at the current price. To be objective: reductions by the controlling shareholder and the state-backed Big Fund are subject to pre-disclosure (15 trading days in advance) and pacing constraints of ≤1% via centralized bidding and ≤2% via block trades per 90 days; the controlling shareholder is also subject to automatic lock-up extension clauses upon earnings decline, so a one-time dump is not the base case; the deep-discount block on 9-30 and Hunpu Fund's H1 reduction of 5.12 million shares both came from the legacy float (not unlock-batch shareholders), and the sample is tiny. But directionally, an unlock/float ratio of 85.7% means the pre-event liquidity discount risk is real, and BSE institutional holdings are extremely thin (Invesco Great Wall BSE Fund bought only RMB 402,000 of this stock in H1) — 1-2 months before the unlock (2027Q1) may see a sentiment trough, also a left-side positioning window.
Three data points corroborate the slowdown in collections: the cash-to-revenue ratio fell from 1.00 in the prior-year period to 0.92, with the gap between RMB 575 million of cash received from sales and RMB 623 million of revenue filled by receivables buildup; the cliff in post-period collection rates (36% vs 87-92% in the prior two years) is the sharpest contrast. To be fair, customers are mainly state-backed wafer fabs (top five at 43.63%, largest customer 18.39%), which is a timing mismatch rather than credit deterioration — but management's "credit period not yet due" explanation is not fully consistent with persistently declining post-period collections, and OCF in the same period of 2025H1 was also negative (-RMB 20.92 million), indicating deterioration deepening beyond seasonality. Q3 cash-to-revenue ratio and receivables QoQ are the validation points.
| Metric | FY2023 | FY2024 | FY2025 | 2026H1 (latest period, as of 2026-06-30) |
|---|---|---|---|---|
| Operating revenue (RMB 100M) | 8.52 | 10.82 | 12.91 | 6.23 (+8.52%) |
| Net profit attributable (RMB 100M) | 6.00 | 1.93 | 8.44 | 18.39 (+1,230%) |
| Adjusted attributable net profit (RMB 100M) | 0.73 | 0.88 | 1.03 | 0.61 (-3.41%) |
| Blended gross margin | 33.02% | 29.44% | 26.78% | 28.08% (-0.07pp) |
| Adjusted net margin | 8.6% | 8.1% | 8.0% | 9.8% |
| Operating cash flow (RMB 100M) | 0.47 | 1.77 | 1.92 | -0.63 |
| Free cash flow (RMB 100M, OCF − capex) | -1.16 | 0.57 | 1.02 | -0.88 |
| Cash + cash-like assets (RMB 100M) | — | — | — | 17.74 (cash 13.04 + within-1-year time deposits 4.70) |
| Of which: Trading financial assets (Piotech stake, RMB 100M) | — | — | 14.14 | 32.74 (48.8% of total assets) |
| Interest-bearing debt (RMB 100M) | — | — | 2.45 | 2.29 |
| Debt-to-asset ratio | — | — | 34.17% | 24.08% |
| Contract liabilities (RMB 100M) | — | — | 1.83 | 1.96 (+7.2% vs period-start) |
Note: Net cash position (cash + time deposits + Piotech stake far exceeds interest-bearing debt), so net debt/EBITDA is deeply negative and not meaningful; the difference between the 34.17% debt-to-asset ratio at FY2025-end and 24.08% at H1-end mainly reflects receipt of RMB 779 million in IPO proceeds.
Reasons for metric changes (YoY ≥ ±20%, with company explanations, all from the 2026 interim report "Reasons for Major Item Changes"): ① Attributable profit +1,230% — company explains "mainly due to increased fair-value gains on held shares"; non-recurring items account for 96.7%; ② Fair-value change gains +36,798% to RMB 1.956 billion — rise in Piotech's period-end market price; ③ Investment income +4,777% to RMB 129 million — realized gains from disposing Piotech shares (6-01 announcement to sell no more than 1 million shares); ④ Operating cash flow -199% — "credit periods not yet expired, collection milestones not reached"; ⑤ Accounts receivable +42.38% — "sales revenue growth + some payments still within credit period"; ⑥ Other income -63.75% — prior-year period included RMB 60 million one-off government grant; ⑦ Repair & maintenance service revenue +70.07% — "continued dry pump volume growth expanding the existing customer base"; ⑧ Export revenue -91.61% — "fewer export customers this period"; ⑨ Cash +70.53% — IPO proceeds received + proceeds from opportunistic disposal of Piotech shares; ⑩ Taxes payable +328%, deferred tax liabilities +132% — taxable gains from Piotech disposal and provisions on unrealized gains.
Revenue clearly lost momentum: H1 revenue of RMB 623 million (+8.52%), with Q1 +38.9% (low base) but Q2 standalone at -5.85%—growth weakened sequentially through the first half. Dry pump core revenue grew only +1.64%, while PV (photovoltaic) revenue continued to shrink (FY2023-2025: RMB 176→105→53 million). Profit structure completely distorted: of the RMB 1.839 billion net profit attributable to parent, 96.7% came from Piotech fair value and disposal gains; non-recurring-adjusted (recurring) profit was RMB 61 million, down -3.41% YoY, with Q2 standalone recurring profit of ~RMB 34 million (roughly -48% YoY). Gross margin: H1 blended at 28.08%, flat, but Q2 standalone measured at 25.49%—Q1's 31.79% rebound proved to be low-base noise (see C4). Cash flow: OCF of -RMB 62.59 million and FCF of -RMB 88.05 million, with cash collection ratio at 0.92—the company paid a large interim dividend of RMB 89.54 million in its first year post-listing (RMB 4 per 10 shares, equal to 146.6% of recurring profit), meaning the dividend cash effectively came from IPO proceeds and share sales rather than core-business cash generation.
Results reconciliation (vs. our previous forecast): Our previous FY2026 forecast was revenue of RMB 1.6-1.7 billion and recurring profit of RMB 120-150 million; H1 actuals completed 36.7-38.9% of revenue and 40.7-50.9% of recurring profit. Extrapolating linearly on FY2025 seasonality (H1 at 44.5% of full-year revenue and 61.4% of recurring profit), full-year figures come to roughly RMB 1.40 billion revenue / RMB 99 million recurring profit—both below the lower bound of our previous forecast range. Why we got it wrong: we were overly optimistic on the H2 order-to-revenue conversion slope—we assumed dry pump unit sales +20-30% for the full year, but H1 dry pump revenue grew only +1.64%. The transmission from YMTC/ChangXin Memory tenders into company revenue carries a 2-4 quarter lag, and the PV drag exceeded expectations. We are revising down FY2026 forecasts to revenue of RMB 1.33-1.46 billion and recurring profit of RMB 95-125 million (see Valuation chapter), still implying a peak-season H2 recurring profit rebound of RMB 34-64 million.
Business model in brief: Order-driven, asset-heavy manufacturing (dual bases in Shenyang and Nantong; dry pump capacity of 10,000 units/year, rising to 26,500 units once fundraising projects reach full production). Customers are wafer fabs and research institutions; revenue is non-subscription but carries repeat-purchase attributes of "installed base + backup pumps on-site + aftermarket maintenance" (repair & maintenance at 16.8% of core revenue in FY2025, +70% in H1). Pricing power is weak: during the adoption phase, the company accepted pricing at 80-90% of foreign competitors' levels plus long payment terms, recapturing some pricing power post-volume via parts and services. It also holds 4.285 million Piotech shares (cost basis near zero), making the financial statements a hybrid of "equipment manufacturing + equity portfolio."
Cash content of earnings: OCF/recurring profit was 0.65→2.02→1.86 for 2023-2025 (core-business collections historically ran ahead of book recurring profit), but plunged to -1.02 in 2026H1; FCF/recurring profit was -1.60→0.64→0.99 for 2023-2025 (converging after the Nantong base construction period). The direct cause of H1 turning negative was working capital absorption from receivables +42.4% and inventory +17.6%—over the long run, core cash generation is adequate; the current crack lies in collection timing (see C7), and confirmation requires Q3 cash collection ratio repair.
Recurring earnings test: H1 non-recurring gains of RMB 1.778 billion accounted for 96.7% of net profit attributable to parent; government grants were only RMB 8.67 million (other income measure: RMB 28.68 million, -63.75% YoY; prior-year period included a one-off RMB 60 million grant)—the RMB 61 million recurring profit is the true core-business earning power, an annualized run-rate of roughly RMB 100-120 million. Return on capital: FY2025 ROIC was ~3.2% (recurring profit × (1-15%) / (net assets + interest-bearing debt)), well below WACC—but the denominator is inflated by a RMB 3.27 billion equity portfolio; ex-financial assets, core-business ROIC is roughly 8-9%. This remains characteristic of a ramp-up phase where "growth relies on investment and returns have yet to beat the cost of capital"—moat realization depends on high-end volume after validation completion. Maintenance CapEx: CapEx/D&A was 6.61→2.96→1.91 for 2023-2025—expansionary spending converging year by year, not a capital black hole—but the depreciation step-up after fundraising projects reach full production (+16,500 units) will pressure gross margin and needs tracking. Quality red flags: profit hostage to stock price (Piotech at 48.8% of total assets), customer concentration (top five at 43.63%, largest at 18.39% and rising), weak pricing power (average prices down three years running).
Consistency of words and actions: pragmatic, leaning conservative. ① The prospectus guidance of Q1 revenue of RMB 230-250 million vs. actual RMB 256 million (2.5% above the top of the range); net profit attributable of RMB 115-125 million vs. actual RMB 172 million (37% above, but the excess came from Piotech mark-to-market gains rather than core business)—core-business performance was essentially delivered in line. ② The commitment to "complete 28 validations before 2026Q4" is consistent across IR meeting minutes and the interim report, without overstated progress (management itself acknowledged "some medium and harsh process steps not yet covered"). ③ The fundraising adjustment (planned RMB 825 million → actual net proceeds RMB 779 million, adjusted down by the same amount; RMB 45.49 million replaced with self-raised funds) followed proper procedures. Sole reservation: no quantitative revenue/order guidance; the qualitative statement of "ample order backlog" sits in tension with financial statement evidence (contract liabilities +7.2%, decelerating revenue).
Shareholder friendliness: neutral-to-friendly, but substance questionable. An interim dividend of RMB 89.54 million in the first year post-listing (RMB 4 per 10 shares), yet equal to 146.6% of H1 recurring profit—dividend cash was actually IPO proceeds and share-sale gains; the IPO issuance of 52 million shares (23.2% of post-issue share capital) constituted one-time dilution. No buybacks, no equity incentives; 3.12 million shares of strategic placement to employees bind the core team, and the prospectus claims zero attrition among 32 core employees.
Risk signals: 7-30 independent director rotation (candidates Zhong Yu and Huang Xiaobo; normal procedures); no equity pledges company-wide, no changes in holdings by directors/supervisors/officers within the window; early-stage financial investor Hunpu Fund sold 5.12 million shares in H1 (exit from legacy free float, not management action).
| Segment | H1 Revenue Share | H1 Gross Margin | GM YoY | H1 Revenue YoY | Business Logic in One Sentence |
|---|---|---|---|---|---|
| Dry vacuum pumps | 67.98% | 25.11% | +0.60pp | +1.64% | Profit engine (~58.5% of FY2025 core gross profit); semiconductors at 91.25% of dry pumps, PV at 6.36% and shrinking |
| Vacuum instruments | 20.74% | 36.57% | +4.62pp | +11.43% | Research institutes / major science facilities (Shanghai Synchrotron, etc.); budget-based customers, highest and improving gross margin |
| Repair & maintenance services | 11.15% | 29.60% | -24.18pp | +70.07% | Installed-base-driven aftermarket; fastest growing but low-margin volume mix dilutes segment GM |
| Other businesses | 0.13% | 99.51% | — | +39.15% | Scrap material disposal; negligible |
The profit engine is the dry pump segment (largest revenue_share × gross_margin), but structural signals matter more than totals: the spread between highest and lowest gross margin segments is 11.5pp (instruments 36.57% vs. dry pumps 25.11%)—research budget-based customers offer a far better bargaining environment than wafer-fab competitive tenders; the -24.18pp drop in services GM shows the aftermarket is in its early ramp, trading margin for installed-base coverage. The medium-term catalyst lies within the dry pump segment: after validation completion, entry into harsh process steps where foreign players maintain high-price monopolies leaves room for structural gross margin uplift (this is also the core pillar of the expectations embedded in the current price).
Accounting red flags (pattern/severity/evidence): ① Unrealized mark-to-market gains inflate net profit and tax burden (medium)—gains not yet realized yet boosting apparent net profit by RMB 1.84 billion; taxes payable +328%, deferred tax liabilities +132% to RMB 471 million (provisioned at 15%); tax and dividend payments effectively consume cash. ② Receivables growth far outpacing revenue with formulaic explanations (medium)—+42.38% vs. +8.52%; "within credit period, settlement not yet due" is not fully self-consistent with the cross-period deterioration in post-period collection rate to 36%. ③ Scaling backup pump inventory (low)—backup pumps of 556/1,208/1,584 units (2023-2025 year-ends), book value RMB 98.45 million; impairment provision of 26.67% is above peers (conservative), but validation delays would amplify impairments. ④ 2023 accounting error correction (low)—retrospective upward adjustment of operating cash flow by RMB 65.76 million (reclassification of tax cash flows on share disposals); small amount, disclosed, no malicious intent.
Cross-period consistency: ① OCF/recurring profit of 0.65→2.02→1.86→-1.02 is inconsistent with historical claims of "healthy collections" (post-period collection rate 87-92%→36%); ② Three consecutive years of gross margin declines are consistent with management's explanation of "price cuts to defend share + PV downturn"; ③ Non-recurring gains share of 87.8%→54.4%→87.8%→96.7% is consistent with the portfolio structure (the company itself disclosed this truthfully in its risk warnings); ④ Dry pump revenue growth of 30.5%→6.6%→1.64% shows a timing tension with the "ample order backlog" claim—the company attributes this to price cuts defending share and PV declines, but the order-to-revenue conversion pace remains to be validated in H2.
Current market data: Share price RMB 65.90 (2026-09-30 close, this report's price anchor), total shares 223.84 million, market cap RMB 14.751 billion. Recurring TTM profit of RMB 101 million implies PE of 146.3x; ex-net cash of RMB 1.546 billion and the RMB 2.743 billion Piotech stake, core-business EV of RMB 10.462 billion implies core recurring PE of 103.8x. PE/PB percentiles not applicable—listed for less than six months, so no valid historical percentile; and apparent profit is dominated by fair value (net profit attributable TTM PE of 5.8x is a distorted figure and must not be used; PB of 2.9x is depressed by financial-asset-inflated net assets, equally distorted). The valuation judgment rests primarily on implied expectations and scenario distribution.
Peer benchmarking (recurring/core-business basis, 2026-09-30):
Hanbell at 26.4x (PV drag, IC adoption phase) marks the bottom of the sector valuation band, Naura at 78.6x (sector leader) the top reference; Forra's early turnaround-phase PE is distorted and excluded. ZKY on both measures trades well above the sector—the entire premium is a bet on ramp-up delivery in 2027-28.
Market-implied expectations: Back-solving from core EV of RMB 10.462 billion at exit multiples: 30x→2028E recurring profit of RMB 349 million, 35x→RMB 299 million, 40x→RMB 262 million (the central case of RMB 299 million equals 86% of the sell side's most bullish figure, Huayuan's RMB 350 million, and 95% of the most conservative, Kaiyuan's RMB 314 million). In one sentence: the current price requires the company to deliver ~RMB 300 million of recurring profit by 2028, while reality is H1 2026 recurring profit of RMB 61 million and negative YoY growth—though it must be noted in parallel that if the sell side's RMB 210 million materializes in 2026 (H2 recurring profit would need to be 2.44x H1), the implied 2026-2028 CAGR is only ~19%, comparable to the historical 18.8%. The dispute is not over the multiple—it is entirely about the H2 2026 volume ramp slope.
Three-layer value (EPV basis): Asset value (liquidation floor) RMB 19.16/share = net cash of RMB 1.546 billion + Piotech stake of RMB 2.743 billion per share—note the floor floats with Piotech's price; every 10% drop in Piotech shrinks the floor by ~RMB 1.2; zero-growth EPV RMB 24.33/share = normalized recurring EPS of RMB 0.49 (FY2026E recurring profit midpoint of RMB 110 million ÷ 223.84 million shares, excluding fair value gains; conservative base given the capacity ramp phase) / WACC of 9.5% (BSE small cap) + per-share cash and financial assets; growth option RMB 41.57/share, 63.1% of the current price—the current price is primarily supported by the growth option; the claim that "the market pays only for zero growth" does not hold. The market is paying a hefty price for the ramp, and whether it's worth it depends on Q4 validation completion and memory tender conversion.
Three scenarios and odds (2028E recurring profit × exit PE + cash and financial assets of RMB 4.289 billion):
| Scenario | Probability | Fair Value Range | Core Assumptions | Exit Multiple Anchor |
|---|---|---|---|---|
| Bear | 25% | RMB 31-37 | Dry pump stall / GM <24% / lockup-expiry selling pressure: 2028E recurring profit RMB 140-160 million | 20-25x (Hanbell 26.4x further discounted for BSE liquidity) |
| Base | 50% | RMB 48-63 | YMTC/CXMT orders concentrated conversion in 2027, 15-18% share: 2028E recurring profit RMB 220-260 million | 30-38x (mid-to-lower end of the Naura 78.6x to Hanbell 26.4x band; 30x at penetration steady state) |
| Bull | 25% | RMB 76-91 | Validation completion + high-end ASP/GM double uplift + overseas breakthrough: 2028E recurring profit RMB 320-360 million | 40-45x (upper end of A-share equipment sector boom valuations) |
The bear case already covers the market's most pessimistic real transaction: the 9-30 block trade at RMB 46.90 (28.83% discount) implies core EV of ~RMB 6.3 billion on the same basis, implying only RMB 180-210 million of 2028E recurring profit—this report's bear case of RMB 31-37 is more conservative than that anchor (the block was a single 22,000-share sample with limited representativeness); the base-case midpoint of RMB 55.5 falls between that anchor and the most bullish published forecast (Huayuan 2028E RMB 350 million × 35x + assets ≈ RMB 73.9), so the anchoring structure contains no overreach. Probability-weighted expected value ~RMB 57.1, -13.3% vs. current price; margin of safety (base-case fair value floor of RMB 48 vs. current price) -27.2%—the price is 18.7% above the base-case midpoint and 4.6% above the base-case ceiling, a distribution skewed to downside risk (+26.7% to the bull-case midpoint, -48.4% to the bear-case midpoint; downside is thicker).
Our own earnings forecast (the anchor for the next results reconciliation): FY2026 revenue RMB 1.33-1.46 billion (H2 delivery peak + order conversion lag), recurring profit RMB 95-125 million (GM 27-29%, recurring net margin 7-9%); FY2027 revenue RMB 1.55-1.80 billion (+16-24%), recurring profit RMB 130-170 million (capacity ramping toward 26,500 units + YMTC/CXMT conversion; no assumption of rapid GM recovery). This is 40-55% below the sell side's FY2026 recurring profit consensus of ~RMB 210 million and 35-50% below the FY2027 consensus of ~RMB 264 million—driven mainly by our more conservative assumptions on ramp-phase gross margin and conversion slope; the Q3 report (late October) is the first reconciliation checkpoint.
Conclusion: Overvalued (gap narrowing). Quality is above average (the only domestic player with mass-production at advanced nodes, tied to both memory giants, RMB 19.16/share of asset support), but the price still runs half a step ahead—RMB 65.90 already prices in the certainty of "2026 volume delivery." Liquidity and supply: 9-30 single-day turnover of RMB 143 million (0.97% of market cap) does not trigger low-liquidity warnings, but ahead of the 2027-04-29 lockup expiry (free float expanding 85.7%), an event-driven discount of 10-15% should be demanded as an additional condition for position building—implying left-side entry at below RMB 48 and even below RMB 47 (block-trade anchor).
1. Industry size: The segment in which the Company competes is integrated circuit (semiconductor-grade) dry vacuum pumps — 11 of the 15 major IC process steps (etching, thin-film deposition, ion implantation, CMP, cleaning, etc.) must use dry pumps, making them "consumable-like operating" equipment components for fabs (5–8 year lifespan + on-site standby pumps + after-sales maintenance market). Market size (calculated per SEMI capacity data cited in Zhongke Yi's prospectus): global demand in 2024 of approximately 125,700 units and approximately RMB 12.574 billion (2023: 112,700 units / RMB 11.275 billion, +11.5%); mainland China 2024: approximately 52,100 units, approximately RMB 5.211 billion (2023: 38,700 units / RMB 3.870 billion, +34.6%), with mainland China wafer capacity up 15% in 2024 (+560,000 wafers/month) as the core driver. Outlook: SEMI forecasts global 300mm fab equipment spending of USD 133.0 billion in 2026 (+18%) and USD 151.0 billion in 2027 (+14%), with memory 300mm equipment exceeding USD 50 billion for the first time in 2026 (+29%); Goldman Sachs expects China WFE of approximately USD 53.0 billion in 2027 and China chip capex growing at double digits to USD 82.0 billion by 2030. Dry pumps scale linearly with capacity/equipment counts, so China's IC dry pump market can sustain 10–15%/yr unit growth over the next three years. (Cross-reference, to be verified: aggregator data put the global dry pump market at ~USD 4.9 billion in 2024.)
2. Value chain and value distribution: Upstream comprises precision castings / rotor-gear machining / motors / seals / bearings / controllers — the Company procures monthly against orders under a qualified supplier list; suppliers are fragmented (top five at 28.11%), and upstream bargaining power is moderate-to-weak; midstream complete units + aftermarket is the Company's segment, with gross profit concentrated in complete units and aftermarket services (benchmark: Ebara Precision Machinery's S&S services at 28–31% of revenue); downstream is fabs (2025H1 top five customers include YMTC at RMB 140 million, CXMT at RMB 122 million, SMIC at RMB 45 million) plus channels including OEM bundling with etch/thin-film main equipment + maintenance service subsidiaries (Shanghai Shangkaiyi is a qualified maintenance supplier to TSMC, SK hynix, and Intel Dalian). The Company's downstream bargaining power shows a "weak first, strong later" structure: before adoption it must accept long qualification cycles and long receivable periods (receivables/revenue reaching ~49.3% in H1); after entry, "on-site standby pumps + scheduled maintenance" creates two-way lock-in with extremely high stickiness — this means its growth is "step-by-step qualification unlocking" rather than linear scaling.
3. Supply-demand and competitive landscape: Supply is highly concentrated — global IC dry pumps are dominated by a handful of foreign players: UK's Edwards (an Atlas Copco subsidiary), Japan's Ebara, and Japan's Kashiyama (qualitative per prospectus; estimated CR3 >70%, to be verified); in China, foreign players still held ~87% share in 2024, with Zhongke Yi's single-company share at 12.72% (revenue basis: RMB 663 million / RMB 5.211 billion, per prospectus) as the domestic No.1; Hanbell Precise Machinery (early-stage volume supply of IC dry pumps to some fabs) and Tongjia Technology (Series A+ funding, small-volume adoption) trail by one tier. Entry barriers: process qualification cycles measured in years (the Company only achieved volume supply on multiple SMIC lines in 2016–2018), reliability data accumulation (MTBF/MTTR), on-site standby pump service networks, advanced-node process gas adaptation experience, and national-level endorsement from the 02 Special Project + Big Fund shareholding. Price wars have emerged: foreign players proactively cut prices in segments where the Company already supplies at volume to defend share, while maintaining high-price monopolies in uncovered segments; PV dry pumps are fully localized and highly commoditized (Hanbell FY2025 revenue -20.4%). Substitution threat is low (no fundamental replacement technology for vacuum generation).
4. Cyclicality and regulation: The industry is in the early-to-mid stage of an AI/memory-driven upcycle — SEMI forecasts record global equipment sales in 2026, reaching USD 229.0 billion by 2028; Ebara Precision Machinery FY2025 orders +16.7% (memory share of revenue rising to ~32%), Atlas Copco 2025Q4 semiconductor vacuum orders rebounding markedly, and Goldman Sachs citing WFE order visibility through 2028. Structural divergence: China's total equipment spending is declining from the 2024 peak of USD 49.55 billion (~-24% in 2025), but rising domestic share offsets the total decline — Zhongke Yi is in the localization upswing of "domestic total bottoming + rising share and structure." Regulation is clearly favorable: the US BIS December 2024 rules (24 additional equipment categories controlled + Entity List) and Japan's third round of China controls effective 2026-08-01 extending to advanced packaging — controls cap overseas supply and directly accelerate domestic qualification/adoption; Big Fund Phase III RMB 34.4 billion (established 2024-05, largest ever) + IC tax incentives provide capital and demand-side certainty. Risk items: if core customers are further added to the Entity List or foreign players cut prices sharply, the slope of substitution weakens at the margin.
5. Peer comparison table:
| Company | Revenue scale | Revenue growth | Gross margin | PE (ex-non-recurring / core) | Key differences vs. Zhongke Yi |
|---|---|---|---|---|---|
| Zhongke Yi | FY2025 RMB 1.291 bn | FY2025 +19.3%; 2026H1 +8.5% | 26.78%→28.08% | 146.3x / 103.8x | Only domestic IC dry pump with advanced-node volume supply; profits held hostage by equity positions |
| Hanbell Precise (002158) | FY2025 RMB 2.927 bn | -20.35%; 2026H1 +0.9% | Vacuum business 35.9% | 26.4x | 70–74% installed-base share in PV dry pumps; IC dry pumps at early adoption, qualification lagging |
| Fortune Precision (688409) | FY2025 RMB 3.543 bn | 2026H1 +34.5% | FY2025 22.2%→recovering | Distorted in early turnaround | Precision equipment components (structural parts); customers are equipment makers, not fabs |
| Xinlaí (300260) | FY2025 RMB 2.998 bn | +5.22% | 24.84% | 133x | Complementary, not competitive, on the vacuum "chamber/piping side"; more diversified downstream |
| NAURA (002371) | Segment leader | 2026H1 +24.9% | 40.1% | 78.6x | Complete-equipment platform; upper reference on valuation band |
| Atlas Copco Vacuum (Edwards parent) | FY2025 segment SEK 36.7 bn | -9% (organic -3%) | EBITA margin 20.6% | — | Global No.1, ~20x the scale; semiconductor orders rebounding in 2025Q4 |
6. Industry positioning: The undisputed domestic leader among challengers — globally, "Edwards/Ebara/Kashiyama split among foreign players, with Zhongke Yi single-handedly breaking the monopoly." Share figures must be presented side by side: the Company claims a 2024 domestic share of 12.72% (prospectus revenue basis); third-party estimates put 2022 localization at ~6% (Huatai) and ~10% in 2024 (Hanbell corporate publication) — the Company's figure is notably higher than third-party overall localization rates, the gap stemming from "single-company share" vs. "industry localization rate"; the prospectus is the highest-grade available source. Share trend is rising (cumulative shipments over 40,000 units, over 30,000 for IC; peers only at small volumes). Moat: switching costs from qualification cycles + on-site standby pumps, scarcity of 14nm coverage, 02 Special Project + Big Fund endorsement, and a CAS-lineage R&D platform; gaps lie in reliability metrics such as operating life/failure rate and penetration of overseas fabs (no volume sales yet).
7. Quantified demand inflection chain (demand-side basis for the structural unit-growth judgment): Driver trajectory (SEMI: 2026 memory equipment +39%; CXMT alone procuring USD 5.0–6.0 billion of equipment in 2026 with domestic-first tenders; YMTC Phase III ramping production in 2026H2) → Unit usage (IC dry pumps scale linearly with etch/CVD/anneal equipment counts; ~13 pumps per 10,000 wafers/month of annual capacity including replacement, per prospectus; more process steps at advanced nodes lift per-line allocation, exact multiple not publicly verified) → Penetration ramp (localization ~6% in 2022 → ~10% in 2024, third-party basis; 2026E 26% is a broker estimate pending verification; Goldman's "domestic equipment output-value share 26% in 2025 → 38% in 2028" is an upper reference on an all-equipment basis) → Company share (starting from 12.72%). Arithmetic check: 2026E China IC dry pump market of RMB 6.3–6.9 bn × 26% localization = domestic pie of RMB 1.64–1.79 bn; Zhongke Yi taking 60–80% of the domestic pie → IC dry pump revenue of RMB 0.98–1.43 bn (+48% to +116% vs. RMB 663 mn in 2024) — the huge gap between this upside scenario and the actual 2026 trajectory (H1 dry pumps +1.64%) is precisely the arithmetic basis for this report's judgment that "the market is pricing the upside scenario as the base case"; the chain is real, but the payoff timing is 2027–2028, not 2026.
A generic framework easily misses three defining features of this business:
① Qualification cycles are the gate in front of revenue. Dry pumps must pass step-by-step process-level testing at fabs (measured in years); revenue growth is "staircase unlocking" rather than linear — the current 28 advanced-node qualifications (14 already passed) are the keys to the next step, and whether Q4 closes on schedule directly determines whether high-end pump revenue can start in 2027. This is also why the qualitative statement of "ample order backlog" can long diverge from current-period revenue: orders do not convert into contract liabilities until qualification is complete.
② Contract liabilities and inventories are leading indicators of order conversion. H1 contract liabilities of RMB 196 million (+7.2% vs. beginning of period), inventories of RMB 614 million (+17.6%, including scaled-up standby pump stocking) — inventory growth outpacing contract liability growth indicates the Company is "stocking ahead of customer orders"; if contract liabilities accelerate sequentially in Q3–Q4, that would be the earliest financial-statement signal of conversion; conversely, if contract liabilities stagnate while inventories keep rising, provision pressure will build.
③ The aftermarket is the second gross-margin curve. Benchmark: Ebara S&S at 28–31% of revenue; the Company's repair/maintenance + parts were only 16.8% of core revenue in FY2025 (H1 revenue +70%); each step-up in installed base (cumulative 40,000 units) lifts the aftermarket repurchase and spares pool value by a step — this revenue carries the highest customer stickiness and the least price-war exposure, a stabilizer through tender-driven volatility.
Overall judgment: Neutral (confidence 0.56, 12 months). Zhongke Yi's industry position is scarce and real (the only domestic player with advanced-node volume applications, tied to the capacity-expansion cycles of the two memory giants, RMB 19.16 per-share cash and equity holdings as a floor), and demand-side catalysts have materially strengthened over the past three months; but the price of RMB 65.9 has already priced the smooth version of the script — "qualification completion + immediate order surge" — as the base case (core-business EV implies ~RMB 300 million 2028E ex-non-recurring profit, 86% of the most optimistic sell-side figure), while the H1 execution record (dry pumps +1.64%, ex-non-recurring -3.41%, Q2 revenue turning negative) does not support that certainty. Over the next two quarters, negative expectation gaps are highly likely to be released: Q3 report showing an apparent single-quarter loss due to Piotech mark-back (not core-business deterioration, do not misread), sell-side earnings downgrades, and the approaching 2027-04-29 lock-up expiry (44.8% of share capital). Strategy: do not chase highs, do not short — wait for the Q3 report and lock-up expiry expectations to push the price to the lower end of the base-case range (around RMB 48 or below RMB 47), then act on the left-side window; if Q4 qualification completion + YMTC/CXMT tender share materialize without the stock moving first, re-rate upward.
Risk and catalyst alerts (chronological): 2026-10-31 Q3 report (ex-non-recurring QoQ / fair-value give-back / contract liabilities) → 2026Q4 advanced-node qualification completion (company guidance: by 2026Q4) → Nov–Dec BSE 50 index rebalancing window → 2027Q1 pre-announcement window for pre-lock-up-expiry share sales → 2027-04-29 IPO lock-up expiry. Upside risks: first high-end pump orders after qualification completion, rapid YMTC IPO progress (cf. CXMT: only 7 months from acceptance to listing), Piotech disposal cash proceeds exceeding expectations. Downside triggers: 2026 full-year ex-non-recurring profit below RMB 90 million, dry pump gross margin falling below 24%, qualification completion slipping to 2027, Piotech falling another 20%+ from current levels.
This report uses the 2026-09-30 closing price (RMB 65.90) as the valuation anchor; prices, market cap, holdings value, and other market data are as of that date or the most recent reporting period. The views herein are based on public information and reasonable assumptions and do not constitute investment advice.