This year, semiconductors have truly become the king of the A-share market; any semiconductor stock that shows even a slight improvement experiences a significant surge.
And it’s not just a few dozen percent increase; we’re talking about doubling or even4, 5 times or 10 times the increase.
This should be considered a characteristic of the A-share market. It always goes crazy when it rises, and when it goes crazy, it traps investors. This time, it seems to be a localized frenzy.
Of course, the overall market can still maintain calm, and there might even be a pullback to stabilize emotions.
If investors can’t resist the temptation and want to take risks, then a portion of them will end up trapped on4, 5 times the high peaks, feeling the cool breeze. But greed is human nature; everyone thinks they won’t be the one trapped, so as long as they run away in time, they might make a100% profit in a short time!
As a value investor, one would not act this way! Just as Munger said: don’t go to dangerous places.
So, are there any reasonably priced semiconductor companies in the A-share market?
Let’s analyze it like we would with consumer stocks:
Haitian Flavor Industry, which was once a major flag of Chinese consumption, has maintained good operations, but its stock price has fallen from116 at its peak to the current40 yuan level, and Haitian has performed well this year?
Of course, mentioning Haitian Flavor Industry is to remind ourselves that even if you find one or two good semiconductor companies, their future prices will inevitably return to where they should be, just like Haitian. Munger calls this mathematical mean reversion.
Now, let’s find and analyze two companies.
Let’s see if we can find companies in the semiconductor field that have similar potential and are currently reasonably priced.
The key to Haitian Flavor Industry’s success lies in: its leading position in the industry, continuous high revenue/profit growth (annualized net profit growth of over20% since going public), stable cash flow, and reasonable valuation supporting long-term returns. Additionally, the current price should not be too outrageous.
Using AI analysis, Haiguang Information and Lanke Technology are still quite good domestic companies.
1. Haiguang Information
Leading AI chip company, with revenue of5.4 billion in the first half of the year, growing over45%, and profits are also good at1.2 billion, with a high growth rate. It should be noted that Haiguang’s market value has reached600 billion RMB.
However, if we calculate using discounted cash flow, it would be around120 yuan per share, which is a huge difference from the current stock price.
2. Lanke Technology
Lanke Technology focuses on DDR5 memory interface chips, benefiting from AI server demand. In the first half of 2025, revenue is expected to be2.633 billion (up58.17%), with net profit around1.15 billion (up85.5%-102.36%), and gross margin continues to optimize. Profitability is also quite good.
However, similarly calculating using discounted cash flow, it would only be around58 yuan per share.
But the current stock price has already reached over130 yuan. The market value has exceeded150 billion.
Including the recently rapidly advancing SMIC, whose stock price has also reached over130 yuan and continues to rise.
These companies are still relatively good and distinctive semiconductor enterprises that can be compared to Haitian.
But we know that this semiconductor feast is still ongoing, but we do not know when it will end.
Even if you buy good companies, they may already be very expensive!
Should you rush in to grab a bowl, or sit back and watch the show?
As a prudent value investor, we definitely choose the latter.
Because after the feast, there will inevitably be a mess left behind.
Let’s see how these stars fare a year from now?