UBS: Raises target price for Montage Technology (06809) to HK$380, benefiting from the development of AI in China.

UBS released a research report stating that although Montage Technology (06809) has shown strong performance after the Lunar New Year, with a gain of 52%, its current valuation is equivalent to a PE ratio of 58 times in 2027. However, if the compound annual growth rate of earnings per share from 2027 to 2030 is 45%, the dynamic PE ratio is 1.3 times, the bank still considers it attractive. With multiple structural growth drivers emerging, the target price has been raised from 237 Hong Kong dollars to 380 Hong Kong dollars, equivalent to a forecasted PE ratio of 70 times (previously 54 times), and reiterated a "buy" rating. UBS raised Montage Technology's 2027 and 2028 revenue forecasts for memory and PCIe interconnect by 14% and 30%, respectively, to 8.1 billion and 11.8 billion RMB. The 2027 and 2028 revenue estimates for PCIe interconnect were also raised by 19% and 40%, respectively, to 2.3 billion and 3.7 billion RMB. This is mainly based on its first quarter gross profit margin significantly exceeding expectations, Agentic AI driving stronger prospects for server CPU, significantly driving growth in memory interconnect chip shipments, accelerated progress in domestication of AI accelerators, and progress in the company's research and development of PCIe Gen6 Retimer/PCIe Switch.