Goldman Sachs: AMEC’s third-quarter gross margin rebounds, while shipment constraints prompt earnings forecast cuts

Why did revenue and operating profit still miss expectations despite an improvement in third-quarter gross margin?

AMEC’s third-quarter 2026 revenue was 3.635 billion yuan, down 4% quarter on quarter and 25% below Goldman Sachs’ previous forecast. Operating profit was 463 million yuan, up 16% quarter on quarter but 53% below Goldman’s forecast.
Gross margin rose from 39.6% in the second quarter to 41.7%, 0.5 percentage points above Goldman Sachs’ forecast. However, continued investment in R&D and new products lifted the expense ratio to 28.9%, above the bank’s forecast of 20.8%.
Quarterly net profit was 1.309 billion yuan, 32% above Goldman Sachs’ forecast, mainly due to investment and fair-value gains. The net profit beat is not inconsistent with core operating profit falling short of expectations.

Goldman Sachs cut its revenue forecasts for 2026–2028 by 10%, 2% and 2%, respectively. Besides incorporating third-quarter results, the bank lowered its shipment assumptions: tight component supplies are constraining near-term shipments, while its previous assumptions about the pace of new-product launches may have been too aggressive.
Goldman Sachs raised its expense-ratio forecasts for the three years to reflect continued investment in R&D, new-product expansion and customer service. At the same time, it raised its 2026 gross-margin forecast by 0.6 percentage points because third-quarter gross margin exceeded expectations.
After incorporating third-quarter investment and fair-value gains, Goldman Sachs raised its 2026 net profit forecast by 4%. However, it cut its 2027 and 2028 net profit forecasts by 7% and 6%, respectively, due to lower revenue forecasts and higher expense assumptions.

Goldman Sachs is optimistic about equipment demand from Chinese memory and advanced-logic customers and rising penetration of domestic equipment. It expects Chinese wafer-fab equipment spending to grow year on year by 13%, 20% and 15% in 2026–2028, respectively, reaching 61 billion US dollars in 2028.
The company is expanding from etching into deposition, chemical mechanical polishing and metrology. Goldman Sachs believes broader product coverage and continued commercialization of new equipment can increase the value of its equipment on customers’ production lines and support long-term revenue growth.
The company’s CCP and ICP etching equipment now covers more than 95% of relevant application needs; more than ten LPCVD and ALD products for advanced memory and logic applications have entered the market. Epitaxy equipment remains at the stage of customer mass-production validation, while the acquisition of Zhonggui expanded its polishing equipment coverage.
As of the end of the third quarter of 2026, more than 9300 process chambers had entered mass production on customers’ production lines.

Goldman Sachs maintained its buy rating and cut its 12-month target price from 582 yuan to 500 yuan. The target remains based on a discounted price-to-earnings multiple: the target multiple fell from 54 times forecast 2030 earnings to 49 times, mainly reflecting lower valuations for industry peers.
The bank noted that demand could come under pressure if trade restrictions expand to mature-node wafer fabs or the company’s ability to supply etching equipment to overseas advanced-node production lines is impeded. Weaker-than-expected capital spending by major Chinese foundries is another downside risk.