Transition pains persist; wait and HOLD

PLEASE READ THE ANALYST CERTIFICATION AND IMPORTANT DISCLOSURES ON LAST PAGE MORE REPORTS FROM BLOOMBERG: RESP CMBR <GO> OR http://www.cmbi.com.hk 1 MN 29 Apr 2026 CMB International Global Markets | Equity Research | Company Update Maxscend (300782 CH) Maxscend (300782 CH) - Transition pains persist; wait and HOLD Transition pains persist; wait and HOLD Maxscend released its FY25 results. Revenue declined by 17% to RMB3.7bn (9% below BBG consensus and ours), while net loss was RMB293mn. GPM declined by 13.8ppts to 25.7% (1ppt below BBG consensus/6ppts below ours) due to 1) low utilization rates at both 6-inch (~50%) and 12-inch (30-40%) fabs, 2) an unfavorable product mix due to the delay in higher-margin module ramp and a greater contribution from lower-value products, and 3) increased raw material costs driven by AI-related demand crowding. More fundamentally, the Company remains in a transition phase toward a fab-lite model with elevated depreciation and ramp inefficiencies continuing to pressure near-term earnings. Maintain HOLD on the Company with TP revised to RMB91, corresponding to 45x 2027E EV/EBITDA (rolled forward from 45x 2026E) to reflect the delayed pace of margin normalization and earnings recovery. We lower our sales forecast for 2026/27E by 24%/27%, and GPM by 8.7ppts/8.2ppts, reflecting intensified market competition and low fab utilization.  Revenue mix gradually improving on L-PAMiD ramp, though still below potential. We view L-PAMiD as the key driver of medium-term recovery, given its successful entry into domestic tier-1 supply chains and clear advantages in cost, size, and integration via bare-die packaging. In FY25, RF module mix increased to 45% (from 42% in FY24), although absolute revenue declined 11% YoY due to delayed ramp and supply constraints earlier in the year. Meanwhile, RF discrete revenue mix fell to 52% (from 56%), with revenue declining ~22% YoY, reflecting both weaker end demand and pricing pressure in more commoditized segments. We expect mix to continue improving into 2026 on the back of L-PAMiD ramp and increasing contribution from high-integration modules.  1Q26 earnings showed early signs of stabilization, but margin pressure persists. Revenue grew 9% YoY to RMB828mn but declined 14% QoQ due to seasonality, while GPM fell to 18.5% (vs. 31% in 1Q25 and 22.8% in 4Q25) in 1Q26, reflecting continued low utilization, elevated depreciation, and ongoing pricing pressure as the Company prioritizes share gains. We expect revenue to gradually recover through 2026 on L-PAMiD ramp, but margin recovery will likely lag, with meaningful improvement contingent on utilization ramp and higher contribution from customized higher-value modules.  12-inch Xinzhuo fab a long-term strategic asset with limited near-term catalysts. The fab has reached stable mass production with competitive yields and supports key processes such as SOI (silicon on insulator) and heterogeneous integration, enabling internalizati