Zhejiang Merchants Key Recommendation || Jiaocheng Ultrasound · Wang Lingtao / Shen Qian

(Source: Zhaoshang Securities Research Institute)

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Key Recommendations

Electronics — Jiaocheng Ultrasonic (688392.SH)

Recommendation start date: April 6, 2026

Chief recommendation

5.5 years of experience in the semiconductor and electronic manufacturing industry, and 11 years of experience in sell-side research. 2024–2025 Best Analyst in the Golden Qilin Awards, and 2024 Best Analyst by the Shanghai Securities News.

Covers consumer electronics/PCBs/perovskite/advanced packaging.

Zhaoshang Securities Electronics Team

Team strengths: Focus on the industry, in-depth research, independent viewpoints, and solid and objective work

Recommended tags: Huazheng New Materials, BOWEI Storage, Jiangbo Dragon, Xinsens Technology, Xinwanda, Lens Technology, Sdieck, Lingyi Zhizao, Olayde, Lite Optoelectronics, Nova Star Cloud, Zhaochi Shares, Hongrida, Luwei Optoelectronics, Jiaocheng Ultrasonic

Team members: Gao Yuyang, Wang Lingtao, Li Qiudi, Shen Qian, Zhao Hong, Cheng Yuting, Tian Faxiang

Reasons for Recommendation

As downstream utilization rates continue to rise, the company’s power battery business has entered an accessory growth cycle; the wiring harness and semiconductor businesses are starting to gain momentum, and in particular, advanced packaging equipment is expected to benefit from domestic substitution and scale up rapidly.

Upside to Expectations

1、The company’s 2025 performance is not up to expectations? The answer is no.

In 2025, the company achieved operating revenue of RMB 774 million, up 32.41% year over year; net profit attributable to shareholders of RMB 118 million, up 36.89% year over year; and net profit after excluding non-recurring items attributable to shareholders of RMB 93 million, up 133.02% year over year. Last December, because the company had not received equipment payments for a long time, it filed a lawsuit against Saqi (tire customer), with an outstanding balance of about RMB 50 million. Based on a prudent principle, the company made a large proportion of provisions for 2025, with the provision amount reaching RMB 38.6298 million. After adding back the provision items, the company’s full-year net profit attributable to shareholders exceeded RMB 150 million, nearly doubling year over year. Profit in the fourth quarter alone exceeded RMB 50 million, up about 50% quarter over quarter; the company’s earnings growth momentum has already begun to be released.

2、The market believes that the application areas for the company’s ultrasonic scanning microscope are mainly HBM, so Changxin’s listing delay/suspension has a negative impact on order visibility.

Actually, advanced ultrasonic scanning microscopes can be used in various advanced packaging fields such as semiconductor wafers, 2.5D/3D packaging, and panel-level packaging. The company has broken the monopoly of European and American enterprises such as Germany’s PVA and the U.S. Sonoscan, and has successfully obtained formal orders from well-known domestic storage customers and completed delivery. This has achieved a 0-to-1 breakthrough in domestic substitution in this field. As a domestic frontrunner, the company is actively expanding from 1 to N. In the future, it is expected to achieve full coverage of domestic advanced packaging customers. Due to the significant demand for ultrasonic testing driven by advanced packaging, equipment supply remains relatively limited globally. As a new entrant, the company has sufficient capacity reserves and expansion capability, and is also expected to enter the global supply chain.

At the same time, the company has already begun its layout in fields such as ultrasonic die bonding and ultrasonic reverse flip-chip bonding. The ultrasonic die bonder (ultrasonic hot-press welding machine) has obtained formal customer orders and is accelerating toward large-scale applications.

3、The market believes the company’s main business is supplying ultrasonic equipment, which is highly cyclical; but we believe that, because it has accessory/parts business, the company is a typical growth-oriented company:

Taking new energy as an example: in 2022–2023, due to downstream being in a new capacity construction cycle, equipment revenue was relatively high while accessory revenue was relatively limited. In 2024, as downstream expansion entered a bottleneck period, equipment revenue declined noticeably. However, starting from the second half of the year, including 2025, as downstream new capacity utilization rates continue to rise, orders and revenue for accessories/parts have grown significantly. In 2024 and 2025, the company’s overall accessory revenue was RMB 184 million and RMB 260 million, respectively, up 70.45% and 41.75% year over year. This shows that once the company achieves a breakthrough in a new application area, it benefits in the early stage from the equipment-demand dividend driven by downstream capacity expansion; later, the accessory/parts business takes over and enables further growth in overall revenue and profit.

4、The market believes that in the past two years, the company’s semiconductor revenue mainly came from power semiconductors and traditional packaging. Since downstream industries are unlikely to see large-scale concentrated capacity expansion over the next two to three years, this business provides limited growth impetus to the company in the near term. We believe that:

Although power semiconductor and packaging capacity are currently in an oversupply stage, the competitive landscape is quietly changing. IDM companies such as TDK? (Dri?—time electronics) and Chiplink Integrated Technologies are continuously strengthening packaging and module capabilities to capture more market share. Chiplink Integrated Technologies has been converting its business model from wafer foundry-type operations to system foundry operations since 2024. Therefore, IDM companies have actually been expanding their own packaging and module capacity over the past two years, and this trend is expected to continue to be maintained over the next two to three years. Relying on its deep accumulation in ultrasonic capabilities, Jiaocheng Ultrasonic is actively opening up other domestic power module customers, continuously eroding the share of overseas suppliers of ultrasonic-related equipment in the power semiconductor field. Relying solely on power semiconductor packaging and module equipment, the semiconductor business growth trend over the next 2–3 years is already relatively clear.

5、The market believes that, aside from its semiconductor-focused layout, the company lacks other emerging application areas with more long-term appeal. But actually, ultrasonic technology can also be applied to emerging fields such as high-voltage automotive wiring harnesses, server copper-cable connections, AI server liquid cooling plate inspection, solid-state batteries, brain-computer interface, and cancer cell targeted therapy instruments. Moreover, in recent years, the company has consistently focused on the layout of “new energy + semiconductors + medical,” and in the above areas it has more or less implemented a layout. Once a breakthrough is achieved, it will help the company achieve step-like growth in performance.

Inspection and Catalysts

Inspection indicators:

1、Orders and revenue related to the company’s semiconductor ultrasonic equipment continue to grow;

2、Advanced packaging—ultrasonic scanning microscopes—continue to achieve breakthroughs with core customers and scale up orders;

3、Ultrasonic scanning microscope achieves breakthroughs with customers across the global supply chain.

Catalysts:

1、Changxin, Changcun, and Shenghe Jingwei go public and raise funds to expand advanced packaging capacity;

2、Power semiconductor customers—Enterprises such as Shidai Electric and Chiplink Integrated Technologies—expand packaging and module capacity, and place with Jiaocheng Ultrasonic orders of a meaningful scale.

Profit Forecasts and Valuation

We expect net profit attributable to shareholders for 2026–2028 to be RMB 233 million, RMB 365 million, and RMB 518 million, respectively. The current market capitalization implies P/E ratios of 54.11x, 34.55x, and 24.33x, respectively. Given that the company’s layouts in multiple emerging application areas are expected to achieve breakthroughs and scale up over the next 2–3 years, the company’s earnings have good upside potential for upward revisions. Maintain a “Buy” rating.

Risk warning: Slower expansion of customers in the wiring harness field or a decline in orders from existing customers; the breakthrough pace of ultrasonic equipment for advanced packaging not meeting expectations; a decline in new energy power battery utilization rates affecting accessory demand.

Zhaoshang Major / Key Recommendations

Product tier: AAA (highest)

Product highlights: Recommended with the strongest confidence by research analysts; the research institute applies the strictest scrutiny; the institute-wide highest-standard recommendation.

Look for the 【Zhaoshang Major / Key Recommendations】label.

Product definition:

“Major Recommendation” ① The logic is especially clear; ② The stock price position is appropriate; generally recommended at the bottom.

“Key Recommendation” ① The logic is especially clear; ② The upward trend is clear; generally a right-side recommendation.

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