Cambricon Technologies (688256.SH) Stock Analysis Report

# Cambricon (Stock Code: 688256.SH) Stock Analysis Report

## I. Report Purpose and Disclaimer
This report aims to provide industry analysis, management analysis, operational analysis, and financial data analysis of Cambricon (Stock Code: 688256.SH) to help investors understand the company's current market position, development potential, and risk factors.
This report is for reference only. The data is analyzed based on public information and does not constitute any form of investment advice. Investment decisions should be made prudently based on individual risk tolerance and financial situation. Investment involves risks, please invest with caution.

## II. Core Conclusion Summary
- **Report Generation Date**: August 22, 2025
- **Data Cutoff Date**: 2024 Annual Report and Q1 2025 Report
- **Investment Rating**: Worth Watching
- **Fair Price Range**: RMB 600-900
- **Key Investment Highlights**:
1. Accelerated AI chip domestic substitution with significant industry growth potential
2. Technology leadership with comprehensive ecosystem layout
3. Explosive Q1 2025 performance growth
4. Strong policy support
5. Ample financial leverage space

- **Major Risk Factors**:
1. Valuation at historical absolute high levels
2. Performance sustainability needs verification
3. Intense industry competition
4. Financial pressure from high R&D investment
5. Large customer dependency risk

- **Recommended Attention Price Levels**:
Current fair price range: RMB 600-900; if stock price falls below RMB 600, it's likely undervalued and worth high attention; if stock price exceeds RMB 900, significant risks may exist.
Support level: RMB 1,100; Resistance level: RMB 1,300

## III. Industry Analysis
### Scale Analysis:
- **Industry Market Size and Growth**: 2025 global semiconductor market size expected to reach $700.874 billion (YoY +11.2%), showing cyclical volatility over past 5 years, with 2021-2023 growth rates of 20%, 13%, -11% respectively, 2024 recovery obvious (May sales +19.8% YoY). China market performing strongly, May 2025 sales +19.8% YoY, ASEAN exports +39.8% YoY.
- **3-Year Growth Forecast**: 2025-2027 CAGR 7.1%, 2027 market size expected to reach $830 billion. AI chips (2030 share may reach 45%), automotive electronics, HBM memory (2025 shipments +57%) are key growth drivers.
- **Key Sector Potential**: Cambricon's AI chip sector layout may reach 45% of semiconductor market by 2030, with accelerated domestic substitution (2020-2024 CAGR 64.8%); servers/data centers benefit from computing infrastructure, optical communications driven by 800G technology iteration, liquid cooling technology explodes due to high-density computing demands.
- **Sub-sector Growth**: Cambricon cloud chip business 2025-2027 CAGR expected to reach 111%, AI inference chip demand surging, ASIC significant potential in autonomous driving and other vertical fields.

### Competitive Analysis:
- **Market Share**: Cambricon is domestic AI chip leader, but GPU market share only fifth (May 2025 data, NVIDIA 70%), cloud chips contribute 99.2% of revenue.
- **Competitive Advantages**: Technology leadership (general-purpose chips adapt to multiple scenarios), domestic substitution policy dividends, full-stack ecosystem layout (cloud-edge-end synergy). Moats include technology barriers, brand effects and customer stickiness.
- **Internationalization Layout**: Products cover Japan/Korea/Europe/US, expanding overseas through vehicle-cloud synergy (L2+-L4 chips) and R&D investment (RMB 20 billion before 2026), but current overseas revenue share still low.

### Summary
Cambricon deeply benefits from AI chip domestic substitution (CAGR 111%) and semiconductor industry recovery ($830 billion by 2027), with technology layout and policy support forming core barriers. But need to break through international giant suppression in GPU field and reduce large customer dependency risks. Liquid cooling/optical communications and other related sectors may become new growth poles.

## IV. Operational Analysis
### Profitability Analysis:

#### 5-Year Complete Financial Indicator Trend Analysis (2020-2024 Annual Reports):
- **Gross Margin**: Shows fluctuating upward trend (2020 65.38% → 2024 56.71%), reaching peak 69.16% in 2023, but declined to 56.71% in 2024, possibly related to product structure adjustment or cost increases.
- **Net Margin**: Continuously negative (2020 -94.68% → 2024 -38.91%), loss magnitude narrowing year by year, 2024 YoY improvement 46.69%, reflecting operational efficiency improvement.
- **Revenue Growth**: 2024 YoY +65.56% to RMB 1.174 billion, 3-year CAGR reaching 43.7%, but 2023 saw -2.7% negative growth.

#### Current Year Quarterly Report (2025 Q1):
- Gross margin 55% slightly declined 1.7 percentage points from 2024 annual report, but net margin significantly turned positive to 31.96%, mainly due to revenue YoY explosion of 4230% to RMB 1.111 billion, showing short-term performance explosion.

#### Profitability Sustainability Assessment:
- Gross margin long-term above 55% shows technology barriers, but net profit turning positive relies on single quarter exceptional growth, need to observe whether subsequent quarters can maintain. Accounts receivable turnover days declined from 357 days (2023) to 145 days (2024), operational efficiency significantly improved.

#### Industry Comparison (assumed peers):
- Gross margin above chip design industry average (~45%), but net margin lags behind leading companies (such as Hygon Information 2024 net margin 18%). R&D investment eroding profits characteristic obvious, belongs to high-investment high-growth type.

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### Risk Control Analysis:

#### Debt-to-Asset Ratio:
- Increased from 12.01% (2020) to 19.16% (2024), still at industry low level (peer average ~35%), sufficient financial leverage space.

#### Cash Flow:
- Current ratio declined from 17.17 (2020) to 7.09 (2024), but absolute value still far above safety line (>2), short-term debt repayment no pressure.

#### Financial Health:
- Comprehensive rating B+, advantages are low debt and abundant cash reserves (2024 cash and cash equivalents 38% of total assets), risk point is continuous negative operating cash flow.

#### Risk Management:
- Accounts receivable turnover rate 2024 improved to 2.48 times (2023 only 1.01 times), showing credit policy optimization, but 357 days→145 days improvement still needs consolidation.

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### Dividend Situation:
- Undistributed profits continuously negative, no dividend records in past 5 years, consistent with growth-stage technology company characteristics.

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### Summary:
Cambricon presents "high gross margin, high growth, high R&D" three-high characteristics, with 2025 Q1 profit inflection point needing subsequent verification. Short-term revenue volume drives performance, long-term need to focus on: 1) R&D results conversion efficiency; 2) Accounts receivable management sustainability; 3) Gross margin defense capability under intensifying industry competition. Investors with high risk tolerance can buy on dips, conservative types recommend waiting for profit model further verification.

## V. Management Analysis
### Direction Assessment:
- **Company Core Strategy Clarity and Consistency**
Cambricon (688256.SH), as domestic AI chip field leader, its core strategy focuses on AI chip and system software key technology R&D, with strategic clarity reflected in:
1. **Core Technology Focus**: Through iterating cloud-edge-end product matrix (such as Cambricon NeuWare platform), strengthening technology barriers;
2. **Clear Market Positioning**: Benchmarking NVIDIA, providing domestic substitution solutions, meeting high-performance AI chip demands;
3. **R&D Investment Commitment**: Planning RMB 20 billion R&D investment before 2026, ensuring technology frontier;
4. **Talent and Risk Control Balance**: Targeted recruitment of mid-high-end talent, while reducing strategic risks through internal controls and intellectual property protection.
Overall strategy consistency high, but need to be alert to technology iteration and market competition challenges.

- **Strategic Execution Continuity**
Cambricon's execution capabilities shown as:
1. **Technology Investment Sustainability**: R&D personnel 76.66%, holding 1556 patents, 2024 received RMB 462 million government subsidies;
2. **Market Expansion Results**: 2025 Q1 revenue YoY +4230.22%, deep cooperation with internet, finance and other multi-field clients;
3. **Strategy and National Policy Synergy**: 87.9% fundraising invested in AI large model chip R&D, participating in "East Data West Computing" strategy;
4. **Supply Chain Forward Layout**: Through advance payments locking upstream resources, responding to order growth.
Need to monitor performance volatility risks and technology iteration pressure.

- **Innovation and Growth Strategy Analysis**
Cambricon's innovation strategy revolves around:
1. **Technology Ecosystem Building**: Cloud-edge-end integrated development toolchain, improving product usability;
2. **Policy Dividend Capture**: Aligning with national AI strategy, receiving funding support;
3. **Performance Improvement Signals**: Two consecutive quarters profitable (2025 Q1), sector linkage effects emerging;
4. **Talent and R&D Synergy**: R&D team experienced, continuously optimizing product efficiency.
Challenge lies in intense industry competition, need to maintain technology leadership.

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### Stability Assessment:
- **Management Team Composition and Stability**
Core executives led by Chairman Chen Tianshi (USTC PhD, CAS background), deep technology background, but some directors' resumes not public, team transparency needs improvement.

- **Key Executive Backgrounds and Experience**
Chen Tianshi (founder) combines academic and industry experience, independent director Wang Dunzhun (Optical Engineering master's) has technology management background, overall executives technology-oriented, but non-technology member information disclosure insufficient.

- **Strategic Execution and Team Collaboration Effects**
R&D investment ratio 157.53% (2023), showing "all-in" technology investment, team collaboration reflected in rapid product iteration and market expansion, but need to balance short-term profit pressure.

- **R&D Investment Decision Analysis**
Decision logic clear:
- **Driving Factors**: Market demand explosion, policy support, technology positioning needs;
- **Risk Control**: Focus on core R&D (such as AI large model chips), optimize resource allocation;
- **Potential Risks**: Technology failure or market below expectations may affect cash flow.

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### Summary
Cambricon outstanding in strategic clarity, execution continuity and innovation layout, with technology investment and policy dividends forming synergistic effects. But need to be alert to:
1. Executive team information disclosure incomplete;
2. High R&D investment bringing short-term financial pressure;
3. Industry competition and technology iteration risks.
Future need to consolidate advantages through ecosystem cooperation and talent optimization, while improving management transparency to enhance investor confidence.

## VI. Stock Price Analysis
### Stock Price Historical Percentiles
- **Current Stock Price**: 1243.20 (Date: 2025-08-22)
- **6-Month Historical Percentile**: 100.00% (at highest level)
- **1-Year Historical Percentile**: 100.00% (at highest level)
- **2-Year Historical Percentile**: 100.00% (at highest level)

**Analysis**: Current stock price at historical absolute high, all time dimension percentiles at 100%, indicating stock price has broken through historical range upper limit, may exist market sentiment overheating or fundamental significant improvement driving factors, need to combine valuation for further rationality verification.

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### PE/PB Historical Percentiles
- **Current Valuation**: PE 4006.77, PB 89.23 (Date: 2025-08-22)
- **PE Percentiles**: 3-year/5-year/10-year all 100.00%
- **PB Percentiles**: 3-year/5-year/10-year all 100.00%

**Analysis**: PE and PB both at historical peaks, far exceeding any past period. Such extreme valuation levels usually reflect market's highly optimistic expectations for company's future growth, but may also imply bubble risks.

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### Valuation Analysis
1. **Historical Valuation Patterns**:
- PE and PB 3-year, 5-year, 10-year percentiles all 100%, showing company valuation completely detached from historical range, no pullback reference points. Need to be alert to valuation mean reversion risks.

2. **PE Indicator Interpretation**:
- Dynamic PE as high as 4006.77, far above industry level (Dynamic PE 111.82), indicating market may over-premium growth, or current profits temporarily pressured.

3. **Industry Comparison**:
- **PE Comparison**: Company PE (4006.77) 31x industry (127.74), significantly overvalued.
- **PB Comparison**: Company PB (89.23) 6.7x industry (13.3), extreme asset premium.

4. **Conclusion**:
- Current stock price and valuation both at historical and industry extreme highs, lacking fundamental support sustainability. Unless company can achieve explosive growth far exceeding industry average, valuation severely unreasonable, recommend cautious assessment of market expectations and potential risks.

## VII. News Reminders
### Macro Policy Impact on Company
2025 national implementation of more positive fiscal policy and moderately loose monetary policy, focusing on supporting technology innovation and other fields. Big Fund Phase III RMB 164 billion investment in semiconductor industry, combined with ultra-long-term special government bonds issuance, will provide funding support and liquidity guarantee for Cambricon and other hard technology companies, overall policy environment favorable.

### Industry Latest Events Impact on Company
Semiconductor industry M&A acceleration (such as Hygon Information merger case) and continuous "chip shortage" highlighting domestic substitution urgency. Cambricon as domestic AI chip leader, technology autonomy gives it advantage position in industry consolidation, Big Fund Phase III capital injection further strengthening industry prosperity expectations.

### Company Latest Events Impact on Stock Price
1. **Performance Explosion**: Q1 revenue YoY +4230%, net profit RMB 355 million, first Q1 profit validating commercialization capabilities;
2. **Technology Catalysis**: DeepSeek-V3.1 large model mentioning next-generation domestic chip design, directly related to Cambricon technology roadmap;
3. **Market Sentiment**: Market cap breaking RMB 520 billion hitting historical high, inclusion in SSE 50 Index enhancing institutional allocation demand. Need to note August 14 abnormal volatility announcement may trigger short-term profit-taking volatility, but fundamental support strong.

### Comprehensive Assessment
Policy, industry, company triple positive factors resonating, performance explosion and domestic substitution narrative strengthening short-term long momentum. Although need to be alert to high stock price volatility, under capital and sentiment driving, 1-4 weeks stock price still has upside space.
[Short-term Impact: Positive (Strong)]

## VIII. Investment Reference Ranges (Not Investment Advice)
### I. Attention Ranges (Reference Price Levels)
- **Short-term (Within 6 Months)**: Reference price levels may be around RMB 1,100-1,300. Current stock price at historical absolute high, combined with policy and performance catalysis, market sentiment may maintain high volatility, but need to monitor valuation extreme deviation correction pressure.
- **Medium-term (1-2 Years)**: Reference price levels may be around RMB 800-1,200. If profit sustainability verified, valuation may gradually converge to industry average; if performance growth slows, may face valuation pullback.
- **Long-term (3+ Years)**: Outlook range may be around RMB 500-1,000. Long-term value depends on technology commercialization capabilities and industry competition landscape, high R&D investment needs to convert to stable profitability.
- **Price Support/Resistance Levels**: If price approaches RMB 1,100, can focus on short-term support; if touches above RMB 1,300, need to note historical high area pressure possibility.

### II. Fair Value Range (Fair Value Reference)
Based on fundamental analysis, current valuation (PE 4006.77/PB 89.23) significantly above industry level, fair value range may be around RMB 600-900, referencing company gross margin improvement and revenue growth potential, but need to be alert to high valuation correction risks.

### III. Risk Warnings
Need to monitor: 1) Single quarter performance explosion sustainability; 2) Semiconductor industry technology iteration and competition intensification possibilities; 3) Liquidity volatility risks under extreme high valuation. Above content for analysis reference only, not constituting trading advice.

## IX. Comprehensive Conclusion
### Industry Outlook Summary
Semiconductor industry in recovery cycle, AI chips, automotive electronics and other fields with huge growth potential. Cambricon as domestic AI chip leader, deeply benefiting from industry growth and policy support, but facing intense competition from international giants.

### Company Fundamental Comprehensive Evaluation
Cambricon presents "high gross margin, high growth, high R&D" characteristics, with 2025 Q1 explosive performance growth, but profit sustainability needs verification. Company technology leading, strategy clear, but valuation at historical absolute high.

### Investment Value Comprehensive Judgment
Current stock price and valuation both at extreme highs, short-term may still have upside space driven by policy, performance and market sentiment, but long-term investment value needs waiting for valuation to return to reasonable range.

### Main Risk Factor Warnings
1. Excessive valuation risks
2. Performance sustainability risks
3. Industry competition intensification risks
4. Technology iteration risks
5. Liquidity volatility risks

**[Disclaimer]** This report is for reference only. The information provided is based on public financial data and market research, and does not constitute investment advice. This report does not consider any individual investor's financial situation, risk tolerance, or investment objectives, and therefore cannot be regarded as personalized investment advice. Investment involves risks, please invest with caution.

**[Compliance Statement]** This report strictly follows relevant laws and regulations, with all analysis content based on publicly available information. Any price ranges, ratings, or recommendations mentioned in the report are for analytical reference only and do not constitute specific trading guidance. Investors should make independent investment decisions based on their own circumstances and bear corresponding investment risks.