Is Revenue Growth Amid Profit Compression Reshaping the Investment Case for Fudan Microelectronics (SEHK:1385)?

Simply Wall St.01-26

In January 2026, Shanghai Fudan Microelectronics Group issued unaudited guidance for 2025, expecting revenue of about RMB 3,930,000,000 to RMB 4,030,000,000, but projecting net profit attributable to ...

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The company links this profit compression to inventory impairment after earlier stockpiling, higher research and development expenses from project write-offs, and smaller tax and subsidy benefits, even as FPGA and MCU chip lines support overall revenue growth. We will now examine how this mix of revenue growth, heavy inventory impairment, and rising research and development spend shapes Shanghai Fudan Microelectronics’ investment narrative. The latest GPUs need a type of rare earth metal called Neodymium and there are only 32 companies in the world exploring or producing it. Find the list for free.AdvertisementWhat Is Shanghai Fudan Microelectronics Group's Investment Narrative?To own Shanghai Fudan Microelectronics, you really have to believe the core FPGA and MCU franchises can justify a rich valuation even when earnings are under pressure. The latest 2025 guidance, with revenue up but profit dropping sharply on inventory impairment, R&D write-offs and lower tax and subsidy support, directly challenges the earlier narrative of clean, high‑quality earnings and improving margins. It also sharpens short term catalysts: the March 28, 2026 results and any colour on whether these inventory and R&D hits are largely one‑off, plus how the incoming state‑backed Guosheng stake might influence capital allocation and risk appetite. At the same time, the stock’s very strong one‑year run and high earnings multiple make any hint of further write‑downs or weaker profitability a more acute risk. However, one risk in particular could quickly change how the market prices that growth story.\n\nShanghai Fudan Microelectronics Group's shares are on the way up, but could they be overextended? Uncover how much higher they are than fair value.Exploring Other PerspectivesSEHK:1385 1-Year Stock Price Chart Two Simply Wall St Community fair values span about HK$3.88 to HK$44.15, reflecting sharply different expectations around Shanghai Fudan Microelectronics’ rich earnings multiple, recent profit compression and the impact of heavy inventory and R&D charges on future performance.Explore 2 other fair value estimates on Shanghai Fudan Microelectronics Group - why the stock might be worth as much as HK$44.15!Build Your Own Shanghai Fudan Microelectronics Group NarrativeDisagree with this assessment? Create your own narrative in under 3 minutes - extraordinary investment returns rarely come from following the herd.A great starting point for your Shanghai Fudan Microelectronics Group research is our analysis highlighting 1 key reward that could impact your investment decision.Our free Shanghai Fudan Microelectronics Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Shanghai Fudan Microelectronics Group's overall financial health at a glance.Curious About Other Options?Our top stock finds are flying under the radar-for now. Get in early:Find companies with promising cash flow potential yet trading below their fair value.This technology could replace computers: discover 23 stocks that are working to make quantum computing a reality.The end of cancer? These 29 emerging AI stocks are developing tech that will allow early identification of life changing diseases like cancer and Alzheimer's.  This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: Manage All Your Stock Portfolios in One PlaceWe've created the ultimate portfolio companion for stock investors, and it's free.• Connect an unlimited number of Portfolios and see your total in one currency• Be alerted to new Warning Signs or Risks via email or mobile• Track the Fair Value of your stocksTry a Demo Portfolio for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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