长电科技新78亿元投资进一步加强其先进封装领先地位

JCET Group (600584.SS) JCET’s New Rmb7.8bn Investment Further Strengthens Its AdvancedPackaging Leadership CITI’S TAKEOn June 24, JCET’s Board approved a Rmb7.8bn (US$1.1bn) investment BuyShort-Term View: Upside, expires 20-SEP-26Price (24 Jun 26 15:00)Rmb94.700Target priceRmb110.000Expected share pricereturn16.2%Expected dividend yield0.2%Expected total return16.3%Market CapRmb169,458MUS$25,033M project to establish a dedicated advanced packaging and testing facility inLingang. The project will proceed in two phases: Phase 1 covers facilityconstruction and equipment procurement (target completion in 2H28),followed by Phase 2 capacity expansion contingent on market conditions.The new facility reflects management’s strong conviction in the long-termgrowth potential of advanced packaging and strengthens JCET’stechnology and scale advantage. We view the announcement as a positivecatalyst, reinforcing JCET’s strategic resolve in advanced packaging at atime of accelerating domestic AI/HPC chip production. Pricingenvironment is positive into 2H26 as industry capacity remains tight. Theincremental advanced packaging capacity coming online in2H28-2029positions JCET to capitalize on China’s volume ramp in high-performancecomputing/networking. We reiterate our positive view on China OSAT andour preference ofJCET > TFME > TSHT. Kevin ChenAC+852-2501-2125kevin.y.chen@citi.com Kyna Wongkyna.wong@citi.com Karen Huangkaren.xw.huang@citi.com Yiming Li, CFAyiming.li@citi.com See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations Not for distribution in the People's Republic of China, excluding the Hong Kong Special Administrative Region and QualifiedForeign Institutional Investors. RELATED: Greater China Semiconductors: Sector Re-Rating Lifts Valuations Across the Board; Model UpdateGreater China Semiconductors: China’s New Rmb2tn AI Investment Plan Positive for Domestic AI Supply ChainGreater China Semiconductors: The New Tauism: Huawei’s Tau Scaling Advances Chip Performance Short-Term View on JCET Group (600584.SS) We expect further share re-rating given 1) persisting revenue/earnings momentum driven by robust computing, memory, andanalog demand, 2) growing reliance on advanced packaging for further performance gains beyond process scaling; and 3) tightcapacity utilization amid strong industry demand. JCET Group Valuation We set our target price for JCET at Rmb110 based on a 6.0x 2027E P/B. We believe the China OSAT industry is entering anunprecedented upcycle driven by AI proliferation, tightening industry supply, and growing emphasis on advanced packaging,thus awarding JCET a premium valuation as a key enabler for advanced packaging. We expect industry capacity utilization toremain tight given the robust demand. Risks Key downside risks to our target price include: 1) advanced packaging expansion outpacing demand growth, especially givenchallenges at the front-end; 2) memory makers internalizing back-end packaging operations; 3) falling utilization after industrycapacity expansion; 4) geopolitical tensions reducing demand for JCET’s overseas operations; 5) US export restrictions limitingsupply of back-end equipment. Tianshui Huatian (002185.SZ; Rmb20.98; 1; 24 Jun 26; 15:00) Valuation We set our target price for TSHT at Rmb23.5 based on a 4.0x 2027E P/B. We believe the China OSAT industry is entering anunprecedented upcycle driven by AI proliferation, tightening industry supply, and growing emphasis on advanced packaging,thus awarding TSHT a premium valuation over its historical range. We expect industry capacity utilization to remain tight giventhe robust demand. Risks Key downside risks to our target price include: 1) AI capex slowdown casting concerns over subsequent OSAT demand; 2) fallingutilization after industry capacity expansion; 3) geopolitical tensions reducing demand for TSHT’s overseas operations; 4) USexport restrictions limiting supply of back-end equipment. TongFu Microelectronics (002156.SZ; Rmb74.64; 1; 24 Jun 26; 15:00) Valuation We set our target price for TFME at Rmb80 based on a 6.5x 2027E P/B. We believe the China OSAT industry is entering anunprecedented upcycle driven by AI proliferation, tightening industry supply, and growing emphasis on advanced packaging,thus awarding TFME a premium valuation as a key enabler for advanced packaging. TFME is also positioned for a strong growthtrajectory supported by robust demand from key customer AMD. Risks Key downside risks to our target price include: 1) market share loss at the key customer for exclusion of AI-related business; 2)memory makers internalizing back-end packaging operations; 3) falling utilization after industry capacity expansion; 4)geopolitical tensions reducing demand for TFME’s overseas operations; 5) US export restrictions limiting supply of back-endequipment. If you are visually impaired and would like to speak to a Citi representative regarding the detailsof