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Author: Xian Yan | Editor: Xiaobai. In the first half of 2026, Ferrotec (An Hui) Technology Development Co.,Ltd. (ASX: 301297.SZ) generated revenue of RMB 1.59 billion, up 9.1% year-on-year. For full-year 2025, those two figures were RMB 2.87 billion and 7.5%, respectively — overall growth that is rather lackluster. However, a horizontal comparison makes it clear that the company's revenue scale has grown substantially in recent years, mainly due to external acquisitions and retrospective disclosure. Meanwhile, non-GAAP net profit attributable to the parent performed brilliantly, reaching RMB 160 million in the first half of 2026, up 227% year-on-year, already matching the level of the entire previous year. The earlier 87% growth rate for full-year 2025 was also outstanding.
Acquisition of Furuohua: Earnings Delivery Falls Far Short
Revenue taking small steps while non-GAAP profit runs in big strides — at first glance, this looks like a semiconductor company that has just unlocked profit elasticity. But looking into the business breakdown, growth is mainly driven by the old business, while the assets injected from the major shareholder are sizable in scale but contribute very limited earnings. Specifically, the company completed the acquisition of 100% equity in Furuohua in July 2025, constituting a major asset restructuring and classified as a business combination under common control for accounting purposes. The company, originally focused on precision equipment cleaning, thereby entered the copper-clad ceramic substrate field, which has already become its largest revenue segment. How much did it cost? RMB 6.55 billion! Using the income approach for valuation, this represented an appreciation of RMB 3.514 billion over book net assets, an appreciation rate of 115.71%. The payment instruments were share issuance and targeted convertible bonds, with supporting funds raised through share issuance. Major shareholder Shanghai Shenhe promised that Furuohua's assessed profits from 2025 to 2027 would be no less than RMB 285.2 million, RMB 342.1 million, and RMB 414.2 million, respectively. The results are plain to see: in the first year, actual completion was only RMB 121.7 million, a completion rate of just 42.7%. Although there were compensation arrangements under the agreement and they were implemented accordingly, the original agreement's performance compensation cap covered only 55.11% of the transaction consideration. Ultimately, that was merely a post-hoc remedy — the damage had already been done. As investors, the more important concern is how much water there was in the original valuation of the acquisition target itself? The core question boils down to one sentence: Furuohua's products are "industry-leading," backed by "30 years of technology accumulation," and "mostly customized" — but why ultimately can this not be converted into pricing power? After the first-year commitment fell through, on what basis can the second-year target of RMB 342.1 million be achieved? A high premium itself cannot prove the transaction was unfair, but first-year delivery of less than half is enough to require management to re-explain its original profit forecast.
Earnings Growth Still Relies on the Old Core Business
Moving from one hot spot to another, the company first rode the "924 rally" with its stock price soaring, and in the first half of this year it was again sought after amid the semiconductor frenzy. (Source: Market Value Cloud APP) One of the most direct benefits to the company was greatly accelerating the conversion of convertible bonds into equity. According to the latest announcement on September 24, all RMB 360 million of targeted convertible bonds had been 100% converted into shares and delisted from the Shenzhen Stock Exchange. Returning to the company's business, the high-priced materials business is still under pressure, and what is currently driving revenue is mainly the old core cleaning business. In 2025, professional technical service revenue, mainly cleaning and derivative businesses, was RMB 964 million, up 23.5% year-on-year; electronic specialty materials revenue was RMB 1.9 billion, up only 0.85%. The former contributed about RMB 183 million in revenue increment, the absolute main force of growth, accounting for 92% of the company's full-year increment. In the first half of 2026, the services segment revenue was RMB 610 million, up 38.9%, with gross margin maintained at 43%; the materials segment revenue was RMB 970 million, actually down 3.9%, with gross margin also falling to 21.6%, a decline of 1.6 percentage points. Therefore, although the acquired materials segment is clearly larger in revenue scale, the company's center stage is still the cleaning business. Its related customers include many leading companies well known in the industry. Service growth is supported by customer repeat purchases, wafer fab operations, and base expansion. In August, the company disclosed a convertible bond plan of no more than RMB 1.176 billion, continuing to invest in cleaning, regeneration, and component projects, doubling down on its old core business and also demonstrating future growth momentum. Although cleaning may not sound as impressive as "third-generation semiconductors," it is a business with customer certification barriers and requiring close-in service. Processing equipment components for wafer fabs and panel plants — cleanliness, surface condition, and timely delivery all affect customer production; passing certification, staying close to factories, and securing stable repeat purchases form the survival foundation of service providers. Direct competitors in cleaning include professional manufacturers such as Shijie Technology under Shihe Technology, Huzhou Kebing, Gaomeike Technology, Nanjing Hongjie, Hualing Technology, Shanghai Yingyou Optoelectronic Technology, and Suzhou Gaoxin Zhongke, with competition concentrated on certification, processes, and regional responsiveness. Most of these companies are unlisted, with insufficient public information. Thinking from another angle, this also suggests that the financial data of a single business standing alone probably does not look good — after all, if they are not listed, could it be that they do not want to be?
Materials Business Growth Outlook Is Not Optimistic
The company mentioned in its latest investor research that AMB can be used for 800V, rail transit, and AI DC-powered SiC modules, while DPC can be used for thermoelectric devices, LiDAR, and optical communications — all areas of greatest market interest. From the customer list served by Furuohua, we can also glimpse that its strength is still intact. The reality is that the materials business is facing a squeeze from both ends, with both selling prices and costs posing challenges. When explaining why Furuohua's commitments were not met, the company mentioned that price cuts passed down by new energy vehicle customers compressed ceramic substrate prices, SiC chip yield and capacity ramp-up fell short of expectations, the pace of automotive penetration was delayed, and raw materials such as gold, silver, and copper rose in price. Downstream presses for price cuts while upstream sends bills — even "one of the few at home and abroad to achieve full-process in-house manufacturing" can hardly stay unaffected. The product breakdown is even more telling: in the first half of 2026, DCB (direct copper-bonded ceramic substrate products) revenue was RMB 450 million, down 16.5%, with a gross margin of 9.7%; AMB (active metal brazing copper-clad ceramic substrate products) revenue was RMB 400 million, down 3.7%, with a gross margin of 27.6%. Neither major product captured growth. Only DPC (direct plated copper ceramic substrate products) deserves recognition: revenue of RMB 94.74 million, up 146.4%, with a gross margin of 35.8%. But its revenue accounts for about 6% of the group, and the increment is not yet enough to offset the decline in DCB. Direct competitors in copper-clad ceramic substrates include internationally renowned players such as Rogers, Heraeus, DOWA, and KCC, as well as domestic players such as Hefei Shengda (unlisted) and Nanjing Zhongjiang (unlisted). Referring to Rogers, its 2025 revenue was USD 810 million, down 2.3% year-on-year, with group gross margin of 31.7%, down 1.7 percentage points, indicating that international giants also had a tough time during the same period. Combined with Wolfspeed (formerly Cree before bankruptcy), which had already gone through bankruptcy and restructuring once as previously studied, as well as domestic leaders Tianyue Advanced, Sanan Optoelectronics, Jingsheng Mechanical & Electrical... is there any silicon carbide company in this market that is doing well? When customers are stretched thin, upstream players naturally find it hard too. The good news, however, is that Tianyue Advanced's latest disclosed third-quarter report showed a turnaround to profit, after still posting a loss in the first half, earning close to RMB 100 million in a single quarter. More noteworthy is that the company mentioned that silicon carbide power devices are gradually approaching the economic critical point of silicon-based devices in some application scenarios, driving continued downstream expansion. (Source: Tianyue Advanced Third-Quarter Report) Regarding comparable companies, the domestic listed companies the company cited include China Ceramics Electronics, Sanhuan Group, and Shennan Circuits, which have some comparability but not very high. These three mainly produce electronic ceramics and semiconductor devices, electronic ceramic products such as MLCCs, and PCBs and packaging substrates, respectively. It is worth noting that Furuohua historically had a relatively high share of highly certified overseas AMB, with gross margins typically higher than domestic ones; however, as domestic companies rise downstream, whether this gross margin can be maintained also deserves observation. The company's revenue increment mainly relies on services. The injection of the materials business has given the company a larger footprint, but also brought heavier responsibility for earnings delivery. DPC volume growth and AMB recovery will be core windows to watch going forward. Ferrotec's scale leap mainly came through acquisitions; with this move, the major shareholder achieved asset securitization, and the company's debt-to-equity conversion was also very successful. Next, it all comes down to real operating results. Disclaimer: This report (article) is an independent third-party study based on the public company attributes of listed companies and the information publicly disclosed by listed companies in accordance with their legal obligations (including but not limited to interim announcements, periodic reports, and official interactive platforms) as the core basis; Market Value Cloud strives to make the content and views contained in the report (article) objective and fair, but does not guarantee their accuracy, completeness, or timeliness; the information in this report (article) or the opinions expressed do not constitute any investment advice, and Market Value Cloud assumes no responsibility for any actions taken based on this report.
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