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TIANYU SEMI(2658)
Analysis¡G
Tianyu Semiconductor is one of the largest manufacturers of silicon carbide (SiC) epitaxial wafers in China¡¦s domestic market. The company is primarily engaged in the design, research and development, and production of various types of silicon carbide epitaxial wafers. It also provides related value-added services, including SiC epitaxial foundry services, epitaxial wafer cleaning services, and silicon carbide-related testing services. Epitaxial wafers are critical raw materials for producing power semiconductor devices. Through the epitaxy process, a specific single-crystal thin film is grown on a silicon carbide substrate, resulting in individual epitaxial wafers with specific crystal orientations and the desired electrical, optical, and mechanical properties. These wafers can then be further processed through dicing, grinding, polishing, packaging, and design to produce power semiconductor devices.
As a third-generation semiconductor material, silicon carbide offers significant performance advantages over traditional materials such as silicon, making it highly suitable for high-voltage, high-temperature, and high-frequency applications. The Group¡¦s products are widely used in downstream sectors including electric vehicles, power supplies, rail transit, photovoltaics, energy storage, and smart grids. Its product portfolio mainly consists of 4-inch, 6-inch, and 8-inch silicon carbide epitaxial wafers. Compared with smaller wafers, 8-inch wafers provide a larger chip dicing area than 6-inch wafers, resulting in lower edge loss and higher effective usable area per wafer. In terms of production capacity, the Group¡¦s new production base in the Dongguan Ecological Park has already commenced operations. This makes Tianyu Semiconductor one of the major manufacturers in China capable of large-scale production of both 6-inch and 8-inch epitaxial wafers simultaneously.
After a period of temporary industry oversupply and inventory adjustment in 2024, silicon carbide epitaxial wafer and substrate market prices showed signs of stabilization in 2025. The industry continues to be in a phase of technological iteration, characterized by a structural shift from 4-inch and 6-inch wafers to 8-inch wafers. To align with the industry trend toward larger, more cost-effective semiconductor materials, the Group is focusing on increasing the market penetration of its 8-inch silicon carbide epitaxial wafers to meet the evolving demand for larger-size and higher-performance materials. To improve operational efficiency and profitability, the Group has actively optimized its supply chain management by increasing the proportion of raw materials procured from domestic suppliers ¡X particularly silicon carbide substrates ¡X which has effectively reduced production costs and mitigated supply chain risks.(I do not hold the above stock.)
Strategy¡G
Buy-in Price: $53.00, Target Price: $59.00, Cut Loss Price: $50.00
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LENS(6613)
Analysis¡G
LENS is a leading provider of one-stop, full-industry-chain precision manufacturing solutions for intelligent terminals, driven by technological innovation and intelligent manufacturing. The company has continuously broken new ground in the field of new materials, pioneering the introduction of glass, sapphire, ceramics and other materials into the consumer electronics industry. Leveraging deep technical expertise across more than a dozen materials ¡V including glass, metal, ceramics, plastics, leather, silicone, glass fibre, carbon fibre and chemical fibres ¡V and supported by its robust platform capabilities, LENS has achieved vertically integrated manufacturing spanning raw material production, functional module lamination, and final assembly. The company maintains long‑term strategic partnerships with global leading consumer electronics and smart automotive brands. Through its ¡§New Materials, New Technologies, New Equipment, New Applications¡¨ strategy, the company continues to expand into emerging fields, covering consumer electronics, smart vehicles, humanoid robotics, AI glasses / XR headsets, AI servers, commercial aerospace, smart retail equipment and other emerging sectors, forming a multi‑scenario, synergistic business layout. On the evening of 14 May, at the welcome banquet for President Trump, Zhou Qunfei, Chairman of LENS, was seated at the same table as Tesla CEO Elon Musk, Nvidia CEO Jensen Huang, and Apple CEO Tim Cook, drawing significant market attention. AI technology is reshaping the landscape of all‑scenario intelligent terminals, with foldable screens and embodied intelligence set to become core drivers of incremental growth in the second half of the year. The company¡¦s forward‑looking deployments are now entering a harvest phase, and the shift from old to new growth engines is expected to unlock ample earnings flexibility in 2H. In the foldable screen segment, for a major customer¡¦s foldable phone project in the second half of the year, the company has entered the supply chain for high‑value core components such as UTG glass, PET film and 3D glass covers. Shipments of these products began in the second quarter, and are expected to contribute significant revenue growth in 2H. In the embodied intelligence segment, as a Tier‑1 supplier to a major overseas customer for more than a decade, the company has secured a defined share of core modules and will enter mass production and ramp‑up this year. At the same time, it is delivering humanoid and quadruped robots in volume to leading domestic customers, advancing on both fronts. As a global leader in consumer electronics glass covers, LENS is at a critical transitional stage where traditional business growth is moderating while new business expansion is accelerating. The company¡¦s core strengths lie in its technological leadership, high‑quality customer base, strong vertical integration capabilities, robust financial position and abundant cash flow.
Strategy¡G
Buy-in Price: $21.92, Target Price: $24.69, Cut Loss Price: $20.19
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POP MART (9992.HK) - Concentration and operating cost concerns emerge
OverviewPOP MART is primarily engaged in the design and development of trendy toys. It operates a comprehensive platform covering the entire industry chain of intellectual property (IP) for trendy toys, with businesses including IP incubation and operation, trendy toys and retail, theme park and experiences, and digital entertainment. The company's products include blind boxes, figurines, ball-jointed dolls (BJD), MEGA, plush toys, and derivatives, among others. Its self-developed products primarily feature artist-owned IPs such as THE MONSTERS, MOLLY, SKULLPANDA, and CRYBABY, as well as licensed IPs, which are sold in both domestic and international markets. High Margin Rivals Luxury Goods, but IP Concentration and Heavy-Asset Expansion Pose RisksIn 2025, the company achieved operating revenue of RMB 37.12 billion with a substantial year-on-year increase of 185%. Overseas sales accounted for 44% of total revenue, indicating that international markets have become a core growth engine. By product category, plush toys contributed 50.4% of revenue, surging 560.6% year-on-year. Centralized procurement effectively compressed costs, supporting profit release. Gross profit for the year reached RMB 26.76 billion, up 207% year-on-year, outpacing revenue growth. The gross margin stood at 72.1% with an increase of 5.3 percentage points. This margin rivals that of luxury goods (typically 60%-80%) and significantly exceeds conventional product pricing logic, reflecting strong pricing power driven by popular IPs and emotional value. In terms of IP structure, artist IPs generated 90% of revenue, with The Monsters contributing over RMB 14 billion, or 38% of total revenue. This highlights heavy dependence on hit IPs such as Labubu, SkullPanda, Molly, DIMOO, and Twinkle Twinkle. Should the company fail to continuously create new blockbuster IPs, a decline in the popularity of core IPs would put downward pressure on revenue. On the expense side, distribution and selling expenses for 2025 totaled RMB 8.08 billion, up 121% year-on-year. Within that, commissions and e-commerce platform service fees were RMB 1.44 billion (+134%), advertising and marketing expenses were RMB 1.19 billion (+110%). While promotion and customer acquisition costs were gradually diluted as revenue grew, short-term lease and variable lease-related expenses reached RMB 1.34 billion (+192%), and transportation and logistics expenses reached RMB 2.043 billion (+276%). These increases indicate simultaneous expansion of stores, headcounts, and logistics systems, raising fixed operating costs -- necessary for revenue growth, but also a double-edged sword: if IP sales weaken, the heavy-asset nature makes it difficult to scale back costs quickly, thereby hurting profits. General and administrative expenses were RMB 1.77 billion (+87%), significantly below revenue growth, demonstrating that the company had achieved economies of scale and built certain industry barriers. City Theme Park Upgrade Exceeds Expectations, IP Omni-Scene Ecosystem AcceleratesPop Mart's City Theme Park, a core offline IP ecosystem venue, recently saw major progress: part of the upgraded area has been completed, with 70% of new content opened early to the public on April 30 (ahead of the May Day holiday). The remaining landscape construction is expected to be fully completed by late July to early August. The park's first full operating year (2024) was already profitable, as the company prioritizes long-term refinement over short-term returns. Notably, even when only about one-third of the area was open, visitor traffic increased significantly, with non-family and non-local visitors each accounting for more than half. The concurrent expansion of "popop" accessory stores (in Beijing and Shanghai) and the independent dessert brand "POP BAKERY" (over 10 pop-up events in multiple cities) further enriches the IP consumption scene matrix, collectively building an immersive themed experience. Venturing into Small Home Appliances: High Premium, Weak StabilityLeveraging its IPs, Pop Mart has entered the small home appliance sector with an initial product line covering five categories, including the LABUBU refrigerator. Adopting an OEM asset-light model, the company plans to first establish a foothold in mainland China before expanding overseas. The LABUBU refrigerator, limited to 999 units globally and priced at RMB 5,999, garnered over 47,000 pre-orders before launch. Its secondary market price once surged to RMB 20,000 but later retreated; after a second batch sold out quickly, some units were resold below the original price. This reflects high emotional premium elasticity but weak stability. The home appliance industry's gross margin is significantly lower than the company's 72.1% overall margin, so near-term earnings contribution is expected to be limited. The long-term strategic rationale is to extend IPs into high-frequency scenarios. Home appliances are functional goods, with quality control and after-sales requirements far exceeding those of blind boxes; failure to meet practical standards could undermine IP trust. While a limited-quantity strategy remains effective in the short term, whether consumers can transition from impulse buying to pragmatic repeat purchases remains to be seen. Valuation and Investment RecommendationsAs China's leading pop toy company, Pop Mart has the capability to cover the entire IP value chain, precisely capturing market demand for emotional consumption while continuously building a diversified IP matrix. The company's 2025 revenue surged, gross margin rivaled luxury goods, overseas and plush product segments drove strong growth, and scale effects are evident. However, IP concentration, heavy-asset expansion, and the quality control and repurchase risks of cross-sector home appliances coexist. We believe the company's share price will depend on the stability of new IP incubation and new scenario profitability. We project revenue for 2026¡V2028 at RMB 44.54 billion, RMB 51.58 billion, and RMB 58.03 billion respectively, with EPS of RMB 11.52 / 14.03 / 16.08. We downgrade the rating to Neutral, with a target price of HKD 158.9, corresponding to 12x forecast 2026 P/E. Risk factors1) Macroeconomic downturn impacting end-consumer spending;
2) The company's overseas expansion falling short of expectations;
3) Weakening appeal of IPs/products;
4) Intensifying industry competition. FinancialCurrent Price as of: 11 May
Exchange rate: HKD/RMB = 0.87
Source: PSHK Est. Download PDF Version
| Recommendation on 18-5-2026 | | Recommendation | Neutral | | Price on Recommendation Date | $ 167.400 | | Suggested purchase price | N/A | | Target Price | $ 158.900 |
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