Nomura: CHPT: New projects lift valuation, while near-term margins and revenue timing face tests

What drove third-quarter growth and the gross margin beat?

CHPT’s third-quarter revenue in 2026 was NT$1.905 billion, up 16% quarter on quarter and 53% year on year, broadly in line with Nomura’s forecast of NT$1.913 billion.
Gross margin was 57.3%, above Nomura’s forecast of 54.0%; one reason was that shipments of low-margin burn-in boards were delayed until September. Nomura expects these products to gradually dilute gross margin from the fourth quarter onward.
Operating expenses were slightly above expectations, offsetting part of the improvement from gross margin. Earnings per share were NT$16.75, broadly in line with Nomura’s forecast of NT$16.39.

Engineering validation and orders for key AI and advanced driver-assistance probe card projects have progressed; a cloud service provider’s CPU project has also advanced, with initial validation shipments imminent. The company plans mass production for the CPU project in 2027.
CHPT aims to raise the share of revenue from total probe card solutions to 30%. The process from engineering validation to mass production takes about two quarters; Nomura believes that if the company can provide total solutions for AI and high-performance computing projects, it could win more test sockets.
Capacity expansion is proceeding as planned, with a target of reaching three times the level at the end of 2025 in the first quarter of 2027.

For a major cloud service provider’s current-generation processor project, CHPT has begun shipping burn-in boards and system-level test boards, while shipments of wafer test and final test boards are largely complete.
The next-generation project remains in the design and new product introduction stages, with engineering validation samples scheduled for shipment in the first quarter of 2027; the timing of mass production remains uncertain. The company believes it is the sole supplier of next-generation load boards, but suppliers of system-level test boards and burn-in boards have yet to be determined.

Management guides for revenue growth of about 50% year on year in 2027, with faster earnings per share growth; however, first-quarter revenue in 2027 is expected to be close to the level in the second half of 2026, potentially below the Bloomberg consensus for quarter-on-quarter growth of 5%–10%. Nomura attributes the slowdown to shipment pace, timing and fewer working days, rather than weaker underlying demand.
Nomura forecasts revenue of NT$11.45 billion in 2027, up 58.4% year on year, and NT$17.003 billion in 2028, up 48.5% year on year. The company also guides for operating expenses to be 20%–25% of revenue in 2027.
Despite improved gross margin expectations, Nomura cut its earnings per share forecasts for 2026–2028 by about 2%–6% after considering expense guidance. Its forecast for 2027 fell to NT$109.53, below the Bloomberg consensus of NT$120.31.

Increased activity on cloud service provider projects has given Nomura greater confidence in CHPT’s ability to provide total solutions. It raised its target price-to-earnings multiple from 20 times to 28 times and applied the higher multiple to average forecast earnings per share for 2027–2028 to derive a target price of NT$4000; the bank maintained its buy rating.
Relative to the closing price of NT$3200 on 28 October 2026, the target price implies 25% upside. Nomura believes further valuation gains depend on project execution; weaker demand, share losses due to competition and slower-than-expected progress on total solutions are the main downside risks.