3Q earnings: Strong orders, supply constrained

北方华创(002371)
    NAURA reported 3Q26 revenue of RMB11.3bn (+1.3% YoY/14.9% QoQ) andnet profit of RMB2.0bn (+5.2% YoY/16.5% QoQ). The YoY deceleration inrevenue (2Q26 growth: +24% YoY) reflected material shortages in selectproduct categories as mgmt. noted that orders continued to grow and shipmentsincreased significantly, suggesting that delivery constraints, rather than demandweakness, were the main bottleneck. GPM fell 2.0ppts YoY and 1.0ppt QoQ to38.3% in 3Q26, reflecting higher component iteration and upgrade costs duringnew-product validation and discounts for certain high-volume customers.Maintain BUY. As China’s leading platform-based semi manufacturingequipment supplier, NAURA remains a key beneficiary of the structurallocalization of the SPE sector. We trim our TP to RMB750 based on 50x2027E P/E (52x prev.), slightly above its one-year historical forward average of48x.
    Order momentum remains firm, but material availability isconstraining delivery. AI-related semi demand, domestic capacityexpansion and equipment localization continued to support market-sharegains across etching, thin-film deposition, thermal processing, wet cleaning,ion implantation, track and bonding equipment in 9M26. Mgmt. notedcontinued order growth and a significant increase in shipments, althoughshortages of certain materials limited revenue conversion. Inventory rose11.1% QoQ to RMB33.9bn by 3Q26, while contract liabilities remainedbroadly stable at RMB5.3bn. The inventory build supports future deliveriesbut highlights the importance of supply-chain execution and customeracceptance. We lower our FY26E/27E revenue forecasts by 4.1%/2.3%.
    Higher R&D investment and GPM pressure continued to constrainoperating leverage. In 9M26, R&D expenses increased 17.2% YoY toRMB3.85bn, while selling expenses rose 41.4% to RMB1.21bn as NAURAexpanded its market-development and customer-service resources.Meanwhile, 9M26 GPM declined 2.0ppts YoY to 39.4%, mainly due tohigher component iteration and upgrade costs during new-productvalidation and commercial discounts for selected high-volume customers.Accordingly, we reduce our FY26E/27E GPM assumptions by0.1ppt/0.4ppt.
    Revenue visibility remains solid, with execution and margin recoverynow the key variables. NAURA’s broad product portfolio, growing orderbase and increasing process coverage should support its medium-termoutlook. Near-term performance will however depend on improved materialavailability, faster product validation and customer acceptance. Key risksinclude prolonged supply-chain constraints, slower customer acceptance,intensifying price competition, etc.