Zhongtai International initiates coverage on Han's Carbon Silicon with 'Buy' rating, target HK$166.30

Target Price: HK$166.30, Based on 22x 2027E P/S

Zhongtai International has released a research report initiating coverage on Hantian Tiancheng (02726), assigning a "Buy" rating with a target price of HK$166.30, based on 22 times the expected 2027 price-to-sales ratio.

The brokerage noted that Hantian Tiancheng held a 31.6% global market share in silicon carbide (SiC) epitaxy in 2024, with its competitive moat built on technology, scale, and customer resources. Driven by rising demand from AI and new energy vehicles, along with an increasing share of large-size products and higher capacity utilization, Zhongtai expects the company's revenue to grow 77.5% and 107.2% year-on-year in 2026 and 2027, respectively, with gross margins improving by 5.2 and 3.2 percentage points to 30% and 32.5%.

Key Views from Zhongtai International

Absolute Global Leader in SiC Epitaxy: Technology and Customer Barriers Form Core Moat

Founded in 2011, Hantian Tiancheng is the world's largest supplier of silicon carbide epitaxial wafers, commanding a 31.6% global market share in 2024. The company's product portfolio covers 3-inch, 4-inch, and 6-inch wafers. It is also the first enterprise globally to achieve commercial delivery of 8-inch SiC epitaxial wafers and has led the development of the world's only international standard for SiC epitaxy.

At the end of 2025, the company launched the world's first 12-inch SiC epitaxial wafer and achieved a small-scale order breakthrough in the first half of 2026, further widening the generational gap with competitors.

In terms of customer resources, Hantian Tiancheng is the first Chinese SiC epitaxy company to enter the international supply chain on a large scale. It covers four of the world's top five SiC device manufacturers, all of which are part of NVIDIA's AI data center supply chain. Eight of the world's top ten power device manufacturers are long-term partners of the company. The certification cycle for SiC epitaxial wafers is lengthy, resulting in strong customer stickiness. The company's global customer base continues to improve, forming a competitive advantage that is difficult to replicate through the triple barriers of scale, technology, and customers.

Resilience Through Industry Cycles: AI Computing Power + Automotive-Grade Applications Open Growth Space

During 2024–2025, the SiC industry was mired in overcapacity and price wars, putting pressure on industry profits. However, leveraging its scale effect as an industry leader, high yield rates, and superior product mix, Hantian Tiancheng demonstrated earnings resilience, with gross margins significantly outperforming peers and maintaining sustained profitability.

In 2026, industry supply and demand are expected to reverse. AI computing power centers, 800V high-voltage electric vehicles, and photovoltaic energy storage are forming diversified demand drivers, boosting demand for high-value-added 8-inch epitaxial products. The company is simultaneously advancing capacity expansion:

• Xiamen Base: Continuously ramping up 8-inch production lines, reaching a monthly capacity of 60,000 wafers in June 2026.
• Malaysia Overseas Factory: Construction began in August 2026 to serve overseas customers, with a planned annual capacity of 400,000 wafers, targeting trial production in the second half of 2027.

Combined with its cutting-edge 12-inch technology reserves, the company is well-positioned to benefit from the long-term expansion of the third-generation semiconductor market, with earnings visibility continuing to improve.

Earnings Forecast

In the first half of 2026, industry景气度 rose, with the company's revenue and adjusted net profit growing 92.0% and 43.4% year-on-year, respectively. Looking ahead, driven by rising demand from AI and new energy vehicles, the SiC industry will benefit from an increasing share of large-size products and higher capacity utilization, supporting a clear volume-and-price growth logic for the company.

Zhongtai International forecasts:

| Metric | 2026E | 2027E | |--------|-------|-------| | Revenue Growth (YoY) | +77.5% | +107.2% | | Gross Margin | 30% (+5.2 ppts) | 32.5% (+3.2 ppts) | | Net Profit | RMB 1.3 billion | RMB 4.8 billion | | Adjusted Net Profit | RMB 3.0 billion | RMB 6.4 billion |

The brokerage expects that economies of scale will dilute various expenses, supporting steady profit growth.

Key Risks

• Price competition risk
• Downstream demand fluctuation risk
• Technology iteration risk
• Customer concentration and certification risk
• Raw material price fluctuation risk
• Industry expansion and capital expenditure risk
• Hong Kong stock market liquidity risk