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UBS upgraded Beijing Huafeng Test & Control Tech (688200:CH) from Neutral to Buy on Monday, raising its price target to RMB165.00 from RMB105.00. The upgrade follows a recent pullback in the stock price, with UBS citing a projected 26% earnings compound annual growth rate from 2026 to 2028 that it believes is not reflected in the current valuation of 28 times 2026 estimated price-to-earnings.
The firm expressed increased optimism about demand for Huafeng’s existing products, particularly its traditional analog integrated circuit testers (STS8200/STS8300), driven by accelerating localization and improving end-market conditions. UBS also noted faster-than-expected ramp-up of the company’s new high-end system-on-a-chip tester, the STS8600.
Based on these factors, UBS raised its 2026-2028 earnings per share estimates by 20-28%, projecting higher revenue and improved profitability. The new estimates stand 9% and 6% above Wind consensus forecasts for 2026 and 2027, respectively.
Huafeng is currently trading around one standard deviation below its historical average, despite delivering a 24% earnings compound annual growth rate from 2016 to 2024. UBS noted that while the stock trades in line with analog integrated circuit fabless companies, it deserves a higher valuation given its breakthrough in high-end system-on-a-chip testing technology.
UBS identified potential catalysts for the stock, including better-than-expected second-quarter results or stronger shipments of the STS8600 tester. The firm’s new price target represents significant upside from current trading levels.
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