I Found a Semi Equipment Stock Trading at a ~45% Discount to NAV

Riding China’s AI-driven chip buildout through a parent that trades at a massive discount to the operating company it controls.

I’ve been working on this post for a couple weeks now and in the time it’s taken me to write it the stock is up something like 40%. A bit annoying...

But I still think it’s worth writing up because nothing about the actual opportunity/thesis has changed. The stock is just less cheap than when I started.

The company is a semiconductor equipment maker. Sells the tools Chinese fabs need to build chips domestically. Cleaning, plating, furnaces, deposition, packaging. I actually first came across it through Jukan on X, he honestly knows this name and the broader semi space way better than I do. If you’re not following him you absolutely should be.

A few years ago this was basically a single cleaning-tool business. Now it ships across six or seven product categories, with the newest lines growing triple digits. And even after the recent run, it trades at a roughly ~45% discount to the public market value of its own subsidiary.

The stock’s entire market cap is less than half of what its stake in the subsidiary is worth… oh and there’s about $1 billion in net cash sitting on the balance sheet.

I believe domestic chip production in China is going to accelerate significantly over the next several years, driven by AI demand and hardened by export controls. If that view is even roughly correct, the companies selling tools into that buildout are going to do very very well. This one is already starting to do well, the market just hasn’t fully caught up to it yet IMO.

I really do think this is one of the more interesting risk/reward setups I’ve come across in a while.