The expansion of local memory and advanced processes will benefit ETown Semiconductor, Goldman Sachs remains neutral (Goldman Sachs)

Street Signal | The expansion of local memory and advanced processes will benefit ETown Semiconductor, Goldman Sachs remains neutral (Goldman Sachs)

Goldman Sachs’ report on E-Town Semis (Huada Jiutian) shows that the company will benefit from the expansion of production capacity of local memory and advanced processes. However, based on the current valuation being more reasonable, Goldman Sachs maintains a "neutral" rating.

Key data shows that Goldman Sachs has lowered its revenue and net profit forecasts for 2026, but raised its forecasts for 2027-28, reflecting short-term pressure, but the mid- to long-term growth trend remains unchanged. The company's 12-month forward price-to-earnings ratio has fallen from its highs after experiencing volatility.

While the long-term growth logic is there, current valuations do not provide enough margin of safety and upside. One sentence conclusion: E-Town Semis will benefit from domestic substitution in the long term, but its recent valuation has reflected some optimistic expectations, and there is no obvious catalyst in the short term.

Good/bad: Good for BGI Jiutian (688729). The market has partially priced in the logic of benefiting from domestic substitution, and the current valuation is not attractive enough. Catalysts:

1) Whether the financial report in the second half of 2026 can show the performance inflection point;

2) The implementation of localization orders in the field of memory and advanced processes.