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Investing.com -- Shares of ACM Research (NASDAQ:ACMR) climbed 10% today following a positive evaluation by Kerrisdale Capital, which called the semiconductor equipment company an emerging high-growth opportunity and a "long idea."
Kerrisdale Capital’s report highlighted ACM Research’s position as a leading supplier of wafer cleaning tools in China and its beneficial role in the country’s push to expand its domestic semiconductor manufacturing industry. The report detailed how the company’s revenue has grown tenfold over the past six years due to China’s response to U.S. export restrictions aimed at curbing semiconductor technology transfer to China.
The endorsement by Kerrisdale Capital suggests that ACM Research, with its main operations in Shanghai, is well-positioned to continue its rapid growth within the Chinese market. It also anticipates that the company will evolve into a formidable competitor to global wafer fabrication equipment (WFE) players as it gains market share outside of China.
According to Kerrisdale, the strategic importance of ACM Research is likely to be bolstered by each new U.S. law that further restricts China’s access to imported WFE equipment. The report argues that ACM Research’s valuation should reflect its significant long-term growth prospects, stating that the company’s shares could potentially reach a market capitalization of $10+ billion.
ACM Research’s subsidiary, ACM Research (Shanghai) Inc., which is publicly listed in China, holds a market capitalization of $5.9 billion and trades at six times its estimated 2025 revenue. Kerrisdale Capital believes that ACM Research’s valuation on NASDAQ does not reflect the true value of the company, especially considering its ownership of 82% of its Shanghai-listed subsidiary.
The report emphasized the discrepancy between the company’s valuation in China compared to its NASDAQ listing, indicating a significant undervaluation and potential for growth in the U.S. market. Investors responded positively to the report, driving up ACM Research’s stock price in today’s trading session.
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