Our target price of Rmb170.0 is based on ~20x FY25E P/S (average - 0.5x standard deviations). We adopt the P/S valuation methodology as we think the P/S valuation method best captures the market recognition and track record of the ATE business, which should be the most important factor to value an early stage semi equipment maker and thus indicate the future sales potential.

Key fundamental downside risks to our target price include: 1) weaker demand recovery; 2) worse-than-expected GPM; and 3) slower-than-expected new product development.