National Silicon: Still Very Overvalued With Massive Capital Expenditure Pipeline

We cut our fair value estimate for National Silicon Industry Group to CNY 3.70 per share from CNY 4.10 after trimming our earnings forecasts to account for near-term cyclicality for 2024, updated expansion schedules for 2024-26, and lack of advanced process exposure for the long term. NSIG is significantly overvalued as market expectations are too high with its lack of exposure to faster-growing high-performance computing and artificial intelligence applications, and hefty capital expenditure for at least the next three years. Taiwanese peers GlobalWafers and its parent Sino-American Silicon Products remain our picks in the sector.