Our target price of HK$85 is based on 22x 2026E P/E, at slightly above its 5-year average. We view the up-cycle valuation multiple justified as we expect revenue and earnings recovery driven by: 1) growing TCB order wins (CoW, HBM) in 2026, and 2) stabilization of mainstream SEMI and SMT. Growing contribution from AI-driven advanced packaging revenue would drive valuation re-rating, in our view.

Downside risks include: 1) a worsening semiconductor industry outlook with delayed recovery; 2) TCB market share loss at key customers; 3) reduced TCB demand due to alternative technologies, such as hybrid bonding; 4) intensifying industry competition; 5) export restriction extending to back-end equipment.