From early 2019 to the present, the stock price of Naura Technology Group Co.,Ltd. (SZ: 002371) has risen from 27.76 yuan (adjusted for splits) to 536.99 yuan, a cumulative increase of 1834%, making it the top performer among A-shares during this period. Specifically, it gained 59.2% in 2024, 58.9% in 2025, and 17% from January to April 2026.
The surge in Naura's stock price is not driven by speculation but is supported by solid performance. Its 2025 net profit was 2363% of its 2018 level, an increase far exceeding the stock price appreciation.
However, the company's performance over the last two quarters suggests momentum may be waning. In 2025, benefiting from the localization of China's semiconductor equipment, Naura's revenue grew by 30.9% year-over-year, but its non-GAAP net profit declined by 4.2%. Particularly in the fourth quarter, revenue grew by 26.3% while non-GAAP net profit plummeted by 82.1%. The situation did not improve significantly in 2026, with first-quarter revenue up 25.8% but non-GAAP net profit increasing only 3.6%.
Thus, the question arises: how much further upside does Naura's performance have?
**Expansion Trajectory**
1) **Platform-Based Equipment Supplier** Originally named Sevenstar Electronics, Naura's main business was electronic components. Facing consecutive losses (non-GAAP net losses from 2015 to 2017) and dim prospects for a turnaround, a restructuring was led by the National Integrated Circuit Industry Investment Fund.
After completing the restructuring in 2017, its main products became electronic process equipment, comprising three major segments: semiconductor equipment (including etchers, oxidation furnaces, diffusion furnaces, and seven other categories), vacuum equipment (including heat treatment, crystal growth, and four other categories), and new energy lithium battery equipment (including coating, slitting, and calendaring). The electronic components business was retained but its revenue share has declined annually—from 34.47% in 2016 to 6.55% in 2025.
Naura rapidly evolved into a leading platform-type company, covering approximately half of semiconductor equipment categories by value. Its product portfolio spans the entire series, including etching, thin-film deposition, heat treatment, ion implantation, electroplating, and bonding.
The value of a platform supplier to customers lies in significantly reducing transaction costs (searching for suppliers, evaluations, negotiations) and improving process synergy efficiency in production.
From 2018 to 2025, Naura's revenue from electronic process equipment grew at an average annual rate of 46.6%.
2) **Is There More Room for Growth?** After experiencing more than tenfold growth, what is Naura's remaining growth potential?
First, consider the broader market. By the end of 2025, the localization rate for semiconductor equipment in China was approximately 30% (with lithography equipment below 1%). Within this, the localization rate for etching and cleaning equipment was close to 60%; for thin-film deposition equipment, it exceeded 40%; for heat treatment equipment, it was between 30% and 40%; and for ion implantation equipment, it was below 20%.
In 2025, global semiconductor equipment sales reached $133 billion (with China accounting for about 40%), a year-on-year increase of 13.7%, setting a historical record.
Global semiconductor equipment sales are projected to reach $150-$160 billion by 2030, with China's share around 50%, implying sales doubling from 2025 levels.
According to national development plans, the localization rate for semiconductor equipment is targeted to reach no less than 60% by 2030, doubling from the 2025 rate.
In summary, sales of domestically produced semiconductor equipment in 2030 are expected to be four times those of 2025. Given the Matthew effect, Naura is highly likely to outperform the market. Examining Naura's recent initiatives (using 2025 as an example):
* Thin-film deposition equipment achieved full coverage of mainstream wafer manufacturing scenarios (including logic, memory, specialty processes, and advanced packaging), with the 1000th unit delivered. * Shipments of heat treatment equipment surpassed 1000 units. * High-end equipment like ion implanters were successfully deployed. * In March 2025, the company entered the coating/developing segment through the acquisition of Kingsemi, a field where the localization rate for equipment was under 10%.
While revenue has grown more than tenfold, the starting base was very low, akin to a seed growing into a sapling.
**Profitability**
1) **Oscillating Upward Gross Margin for Electronic Equipment** Over the past six years, Naura's gross margin for electronic equipment has oscillated upward from 28.7% in H1 2020 to 41.7% in H1 2025, an improvement of 13 percentage points.
* H1 2020: Gross profit 5 billion, gross margin 28.7% * H1 2021: Gross profit 10.1 billion, gross margin 35.5% * H1 2022: Gross profit 14.9 billion, gross margin slightly down to 31.6% * H1 2023: Gross profit 30.6 billion, gross margin 38.4% * H1 2024: Gross profit 50.9 billion, gross margin 44.6% * H1 2025: Gross profit 63.9 billion, gross margin 41.7%
Naura's gross margin for electronic process equipment shows significant seasonality, typically being higher in the first half than the second half. However, from 2020 to 2025, the absolute gross profit amount in the second half always exceeded that of the first half.
For instance, in 2025, the second-half gross margin was 37.4%, 4.3 percentage points lower than the first half, but the second-half gross profit exceeded 8 billion, a sequential increase of 26.2%.
2) **Gross Profit and Expenses** Using a blue line to represent gross margin and colored stacked bars for expense ratios, operating profit is achieved only when the blue line "submerges" the colored bars.
From this perspective, Naura is a standard high-performing stock—the blue line sits well above.
For example, in Q1 2024, the gross margin was 44%; combined sales, management, and R&D expenses accounted for 24.2% of revenue. This means the gross margin exceeded the total expense ratio by 19.8 percentage points.
In Q2 2024, the gross margin fell to 40%; the total expense ratio rose slightly to 26.9%, leaving a margin of only 13 percentage points above expenses.
In Q4 2025, an anomaly occurred: the gross margin dropped to 37.2%, 2.7 percentage points lower than Q4 2024; the total expense ratio also reached 37.2%, 10 percentage points higher than Q4 2024, resulting in zero quarterly operating profit.
Examining the expense structure: the selling expense ratio was 6.5%, 3.4 percentage points higher than Q4 2024; the administrative expense ratio was 12.9%, 4.7 percentage points higher; and the R&D expense ratio was 17.8%, 2.3 percentage points higher.
In Q1 2026, the situation improved but did not return to normal: the gross margin was 40.8%, 2.2 percentage points lower than Q1 2025; the total expense ratio was 25.1%, 3.3 percentage points higher.
3) **Net Profit** Post-restructuring, Naura's net profit showed a pattern of sharp rise followed by a pullback.
* 2020: Non-GAAP net profit under 2 billion, profit margin 3.3% * 2021: Non-GAAP net profit increased to 8.1 billion, profit margin 8.3% * 2022: Non-GAAP net profit surged 161% to 21.1 billion, profit margin 14.3% * 2023: Non-GAAP net profit climbed further to 35.8 billion, profit margin 16% * 2024: Non-GAAP net profit peaked at 55.7 billion, profit margin 18.5% * 2025: Non-GAAP net profit fell back to 53.4 billion, profit margin 13.6%
In 2025, revenue grew 30.9% while non-GAAP net profit declined 4.2%, seemingly falling into a "revenue growth without profit growth" dilemma. The profit decline in 2025 had two main causes: a decrease in gross margin and an increase in the expense ratio.
The gross margin decline was primarily due to new products being in the introductory phase. On one hand, customer confidence is insufficient, and Naura needs to refine products based on feedback, preventing high pricing. On the other hand, costs associated with iterative upgrades of all components for new products need to be absorbed.
The high expense ratio also had two reasons: the sales and management of the acquired Kingsemi were not yet fully integrated with Naura, and R&D expenses for new products increased substantially.
As shipments of new products grow, gross margin and expense ratios are expected to improve significantly, potentially elevating Naura's profitability to a new level.
**Assessing Potential Through Two Metrics**
1) **Inventory Turnover** Naura's inventory is categorized into four types: raw materials, work in progress, finished goods, and consumable supplies.
As operational scale expanded, the book value of Naura's inventory steadily increased, and its ratio to revenue exhibits a cycle of approximately 5-6 quarters. For example:
* Q1 2023: Inventory book value 151 billion, equivalent to 390% of quarterly revenue (peak) * Q4 2023: Inventory book value increased to 170 billion, equivalent to 217% of quarterly revenue (trough) * Q2 2024: Inventory book value 211 billion, equivalent to 324% of quarterly revenue (peak) * Q4 2024: Inventory book value 236 billion, equivalent to 248% of quarterly revenue (trough) * Q2 2025: Inventory book value 311 billion, equivalent to 392% of quarterly revenue (peak) * Q4 2025: Inventory book value 286 billion, equivalent to 238% of quarterly revenue (trough) * Q1 2026: Inventory book value 286 billion, equivalent to 277% of quarterly revenue (rising phase)
2) **Contract Liabilities** Contract liabilities primarily arise from having received full or partial payment for goods or services not yet delivered.
Over the past three years, the amount of Naura's contract liabilities has generally shown a downward trend, with its ratio to quarterly revenue higher at the start of the year than at the end.
* Q1 2023: Contract liabilities 78.2 billion, equivalent to 202% of quarterly revenue * ... * Q4 2023: Contract liabilities 83.2 billion, equivalent to 106% of quarterly revenue * Q1 2024: Contract liabilities 92.5 billion, equivalent to 155% of quarterly revenue * ... * Q4 2024: Contract liabilities 62.2 billion, equivalent to 65% of quarterly revenue * Q1 2025: Contract liabilities 57.5 billion, equivalent to 70% of quarterly revenue * ... * Q4 2025: Contract liabilities 42.9 billion, equivalent to 36% of quarterly revenue * Q1 2026: Contract liabilities 42 billion, equivalent to 41% of quarterly revenue
Claims that "a company's order backlog extends to 2028" are not necessarily positive; they may indicate delivery capacity cannot keep up with market demand. Opportunities are fleeting and do not wait for any single company. Naura's rapid revenue growth coupled with a swift decline in contract liabilities sufficiently demonstrates its ability to capitalize on substantial market opportunities.
*The above analysis is for reference only and does not constitute any investment advice.
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