Bernstein: AMEC’s third-quarter revenue misses expectations: record orders, but component supply slows growth

Why did revenue growth slow, and what do orders signal?

In the third quarter of 2026, AMEC generated revenue of 3.635 billion yuan, up 17.2% year on year, a marked slowdown from growth of about 35% in the first half. Revenue fell 3.7% quarter on quarter and was 18% below market consensus.
Management said both new orders and their growth rate reached record highs, and expects order growth to continue into the fourth quarter of 2026 and 2027, supported by customers’ ongoing capacity expansion. Bernstein believes the slowdown in revenue growth continues to reflect the challenge of securing sufficient components.

Management said global component supply has tightened since September, particularly for some imported parts. Overall supply-chain constraints remain manageable, however, equipment is being delivered broadly on schedule, and the shipment fulfilment rate has remained at 95%–100%.
The company has accelerated procurement and stockpiling to meet strong orders and future shipment needs: inventory rose to 9.08 billion yuan at the end of the third quarter from 7.17 billion yuan at the start of the year. Around 60%–70% of key components are locally sourced; management believes further localisation will help supply-chain resilience and long-term cost control.

Third-quarter gross margin was 41.7%, up 2.03 percentage points quarter on quarter. Management attributed this mainly to changes in the product and customer mix and believes the long-term average gross margin can remain above 40%. A greater share of deposition equipment, localisation of key components and economies of scale are expected to provide further support for profitability.
Quarterly net profit was 1.309 billion yuan, up 159% year on year, but Bernstein noted that the substantial earnings beat came mainly from investment gains. Excluding non-recurring items, net profit was 500 million yuan, up 43.8% year on year and down 22.4% quarter on quarter; the corresponding margin was 13.8%, down 3.31 percentage points from the previous quarter.
The company continued to invest in next-generation product platforms, including etching, deposition and metrology. Third-quarter R&D spending rose 27.7% year on year; total R&D spending was approximately 34% of revenue for the quarter.

Taking recent quarterly volatility into account, Bernstein cut its revenue forecasts for 2026–2028 by 3%, 4% and 8%, respectively, to 16.364 billion yuan, 29.394 billion yuan and 55.855 billion yuan. Its forecasts for the latter two years remain 24% and 74% above market consensus, respectively.
The firm maintained its margin outlook assumptions and raised its target valuation multiple from 41 times to 44 times. Applying this to its reduced 2028 earnings-per-share forecast of 14.95 yuan, it maintained its 660 yuan price target and Outperform rating. Risks to its assessment include lower-than-expected capital spending by Chinese fabs and slower-than-expected localisation of domestic equipment due to technology or capacity bottlenecks.