更新我们的模型；目标价上调至25元人民币

Shanghai Vital Deeptech (600641.SS) Updating Our Model; TP Raised to RMB25 CITI'S TAKE We update our forecasts for Vital Deeptech (formerly Wanye Enterprises)and introduce 2028 estimates. Maintain Sell as we see continuing losses incoming years. While we are positive on demand for the company’s ionimplanters (via subsidiary Kingstone), we expect overall profitability to staycompressed as the low-margin bismuth-material segment (GPM: 14%/18%in 2025/26E) now constitutes 70%-80% of total revenue. Vital Deeptechturned loss-making in 2025 on GPM compression, and we expect losses tocontinue in 2026E-28E unless bismuth segment profitability meaningfullyimproved. Although Kingstone should be well-positioned to benefit fromChina’s semiconductor localization drive, its ability to develop/manufactureadvanced equipment may be constrained following its inclusion on the USBIS Entity List. Our new Rmb25.0 TP (vs Rmb13.0 before) is based on 2.9x2027E P/B (1-SD above 5-year avg), reflecting the broader WFE sector re-rating. Our prev. TP was on 1.5x 2025E P/B or 1-SD below 5-year avg. nSell Price (30 Jun 26 15:00)Rmb39.860Target priceRmb25.000↑from Rmb13.000Expected share price return-37.3%Expected dividend yield0.0%Expected total return-37.3%Market CapRmb37,742MUS$5,575M Forecast update—Vital Deeptech entered bismuth material business in 2025 withmeaningful impact to its revenue mix. Bismuth revenue alone exceeded Rmb1.3bnin 2025 (vs. 2024 total revenue of Rmb581mn), constituting 71% of the FY revenue.However, bismuth GPM was well below group avg at 14% in 2025, thus dragging theblended GPM down to 20% and resulting in net loss. As we expect the bismuthrevenue contribution to remain high (70%-80% total revenue), a profit-turnaroundcould prove difficult until there is a meaningful improvement in bismuth margins. Wetherefore raise our revenue forecasts reflecting the new business addition but nowmodel net losses for 2026E-28E (see Figure 3). Shares have rallied on sector re-rating; maintain Sell—Vital Deeptech sharesmore than doubled in the past 3 months driven by the broader WFE sector re-ratingfrom China’s semiconductor localization drive, hence we apply a higher P/B multiple(2.9x or +1-SD above its 5-year mean). Although other Chinese WFE players aretrading significantly above their historical mean valuation, we apply a smallerpremium to Vital Deeptech reflecting its limited ~30% profit contribution from WFE.While positive market sentiment towards WFE could continue to carry the shareprice higher in the near term, we see risks of correction as the company reportslosses at results announcements for the low-margin bismuth business. Despite ourhigher target multiple, the stock looks expensive. Maintain our Sell rating. 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 © 2026 Citigroup Inc. No redistribution without Citigroup’s written permission.Source: dataCentral, Citi Research Shanghai Vital Deeptech Company description Originally a real estate developer (Wanye Enterprises), the company diversifiedinto semiconductor equipment/component in 2015 through variousinvestments. In 2018, Wanye acquired 100% stake in KingstoneSemiconductor, a domestic pioneer of ion implanters that supplies to localfoundries and memory makers. Wanye also established JoysingSemiconductor in 2020 aiming to produce etching, deposition, and thermalequipment. Vital Group became Wanye’s controlling shareholder in 2024 andrenamed the company Vital Deeptech, with new bismuth material business askey growth driver. Investment strategy We have a Sell rating on Vital Deeptech as we expect persisting unprofitabilitydue to margin dilution from the lower-margin bismuth business, which nowaccounts for 70-80% of the company’s total revenue. While we believeKingstone is well positioned to benefit from China’s semiconductorlocalization as one of the few domestic suppliers of ion implanters,Kingstone’s ability to develop and manufacture advanced equipment may beimpacted after its inclusion on the US BIS Entity List. Valuation Our target price of Rmb25.0 is based on 2.9x 2027E P/B, at 1 SD above its 5-year average of 2.2x. We assign a premium to its historical valuation givenpositive sentiment for Vital Deeptech’s 1) semiconductor equipment, 2)bismuth material (scarce metal) has lifted its share price on sector valuationre-rating. However, the company turned loss-making in 2025 as the lower-margin bismuth business became its key revenue driver. Kingstone’s inclusionon the US Entity List also increases supply risk of critical component andtechnologies. Risks Upside risks to our target price include: 1) profit turnaround as bismuthmargin improves; 2) strong domestic equipment demand driven bylocalization of semiconductor supply chain; 3) new government localizationtarget or support policies; 4) completion of component and material supplysubstitution based on