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Zhongtai International initiates coverage on Han Tian Tian Cheng with Buy rating, citing leading SiC epitaxy position
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Zhongtai International initiated coverage on Han Tian Tian Cheng (02726) with a 'Buy' rating and a target price of HK$166.30, based on 22 times 2027 expected price-to-sales ratio. The report highlights the company as the world's largest silicon carbide (SiC) epitaxial wafer supplier, with a 31.6% global market share in 2024. It is the first to commercialize 8-inch SiC epitaxy and released the world's first 12-inch SiC epitaxial wafer in late 2025. The company serves four of the top five global SiC device makers, all of which are in NVIDIA's AI data center supply chain. Despite industry overcapacity and price wars in 2024-2025, the company maintained profitability due to scale and high yields. The report forecasts a supply-demand reversal in 2026 driven by AI, 800V EVs, and solar storage. Capacity expansion includes an 8-inch line in Xiamen (84,000 wafers/year by end-2026) and a new Malaysia plant (400,000 wafers/year, trial production by H2 2027). Revenue and adjusted net profit surged 92.0% and 43.4% year-on-year in H1 2026. The report projects 2026/2027 revenue growth of 77.5%/107.2% and gross margin improvement to 30%/32.5%. Risks include price competition, demand fluctuations, technology iteration, customer concentration, raw material costs, expansion costs, and Hong Kong stock liquidity.
Source report
CGTech (02726) is the world's largest supplier of silicon carbide (SiC) epitaxial wafers, according to a research report released by Zhongtai International.
Market Leadership and Product Portfolio
- Global market share: 31.6% in 2024
- Product sizes: Covers 3-inch, 4-inch, and 6-inch SiC epitaxial wafers
- Industry firsts: The first company globally to achieve commercial supply of 8-inch SiC epitaxial wafers
- Standard-setting: Led the development of the world's only international standard for SiC epitaxial wafers
- Next-generation products: Released the world's first 12-inch SiC epitaxial wafer at the end of 2025, with small-scale orders expected in the first half of 2026
Customer Base
- Serves 4 of the world's top 5 SiC device manufacturers, all of which are suppliers to NVIDIA's AI data center supply chain
- 8 of the world's top 10 power device manufacturers are long-term partners
- 35 customers currently purchasing 8-inch products
Industry Dynamics and Financial Performance
The report notes that the SiC industry faced severe overcapacity and price wars during 2024–2025, pressuring industry profits. However, CGTech demonstrated earnings resilience due to its:
- Leading scale effect
- High yield rates
- Superior product mix
The company's gross margin significantly outperformed peers, and it maintained consistent profitability.
2026 outlook: The industry is expected to see a supply-demand reversal, driven by diversified demand from:
- AI computing centers
- 800V high-voltage electric vehicles
- Photovoltaic and energy storage systems
This shift is boosting demand for high-value-added 8-inch epitaxial products.
Capacity Expansion
| Location | Details | Timeline | |----------|---------|----------| | Xiamen Base | Expanding 8-inch production lines; monthly capacity reaches 60,000 wafers by June 2026 | Total annual capacity expected to reach 840,000 wafers by end of 2026 | | Penang, Malaysia | New 8-inch SiC epitaxial wafer production base | Construction begins H1 2026; planned annual capacity of 400,000 wafers; trial production targeted for H2 2027 |
Financial Forecasts
In the first half of 2026, benefiting from rising industry景气度, the company's revenue and adjusted net profit grew 92.0% and 43.4% year-on-year, respectively.
Looking ahead, driven by AI and new energy vehicle demand, along with an increasing share of large-size products and higher capacity utilization, the company is expected to achieve:
| Metric | 2026E | 2027E | |--------|-------|-------| | Revenue growth | +77.5% | +107.2% | | Gross margin | 30.0% (+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 |
Valuation: Based on 22x 2027E price-to-sales ratio, the analyst sets a target price of HK$166.30. Initiate coverage with a "Buy" rating.
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
Source
金吾资讯Eastern
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Hantian Tiancheng surges over 7% after Zhongtai initiates Buy rating, citing SiC leadership