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Acmr Pitch Deck

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ACM Research is a leading developer and manufacturer of single-wafer wet cleaning equipment for the semiconductor industry. They have a history of rapid revenue and earnings growth, proprietary technology, and appear undervalued based on an analysis.

ACM Research focuses on developing innovative equipment for the semiconductor industry, specializing in single-wafer wet cleaning tools which account for 85% of their revenue. Their products range in price from $500,000 to $5 million.

ACM Research has over 285 patents, is the market leader in single-wafer wet cleaning equipment with 50% global market share, and benefits from being an early technology leader with strong customer relationships.

Lewis Taylor – 19 June 2020

Investment Overview – BUY (Long)


Business Description Financial & Stock History

ACM Research (NASDAQ: ACMR) develops, Key Stats (USD mm)


manufactures, and distributes specialized
cleaning and wet processing technology for the Market Cap $1,101 Revenue $107.5
advanced semiconductor industry.
EV/EBITDA 63.7x Net Income $19.5

EBITDA CAGR (3y) 71.7% Upside 28.9%

Historical Revenue (USD mm) Share Price: $60.43 High | Low: $69.25 | 12.51

Revenue 300%
120 250%

100 107.5 200%

150%
80
100%
74.6
60 50%

0%
40
36.5 -50%
20 27.4 Jun-19 Aug-19 Oct-19 Dec-19 Feb-20 Apr-20

ACM Research, Inc. (NasdaqGM:ACMR) - Share Pricing


0
NASDAQ Composite Index (^COMP) - Index Value
2016 2017 2018 2019

1. Cap IQ Company Profile – ACM Research


2
2. ACM Research – Investor Relations website
Investment Thesis

1
ACMR has over 285 patents allowing it to
Proprietary Competitive differentiate, innovate, and offer premium
Advantage technology

2
ACMR’s revenue & EBITDA growth far
Rapid Growth exceeds the industry. (57.2% compared
with industry’s revenue CAGR of 7.1%)

3
Advanced semiconductors needed for IoT
Long-term Tailwinds and other technological innovations rely
on ACMR technology

4
ACMR’s primary technology, wafer cleaning
Market Share Leader equipment, controls 50% of the global
market

5
ACMR is substantially undervalued. The
Highly Attractive Valuation recent market decline has further increased
the upside, creating a valuable opportunity

1. ACMR 2019 10-K


3
2. Statista – Global Semiconductor industry
Business Overview
BUSINESS MODEL CUSTOMERS
 Focused on developing a “strategic  “1% yield loss can lead to annual profit
portfolio” of IP and innovative advanced decrease of $30M to $50M”(5)
equipment for the semiconductor industry
 Key customers are industry leaders but
 Specialty is single-wafer wet-cleaning tools consolidated in number and Asia based
– Products range from $500 thousand to  Primarily serves memory chip, wafer supply,
$5 million (per unit) and microelectronics companies
– 85% of total revenue in 2019
 Also offers back-end assembly and
packaging tools
 R&D, manufacturing, and distribution are all
vertically integrated
 Global sales team with refined acquisition
and retention tactics

1. ACMR 2019 10-K 3. WaferPro – What is a silicon wafer? 5. ACM customer data
4 2. Multi Source Manufacturing – The Importance 4. ACMR Supplemental Investor Presentation
of Wet Processing
Industry Analysis
COMPETITIVE ENVIRONMENT

Threat of new Threat of Bargaining power Bargaining power Competitive


entrants substitutes of customers of suppliers Rivalry
Low Moderate High Moderate Low

COMPETITIVE ADVANTAGE
 ACMR is the market leader of single-wafer wet-cleaning equipment (50% global market share)
 Technology leader with an early mover advantage
– Developed relationships with industry leading fabricators and suppliers
– Extended maintenance contracts to provide recurring revenue streams
 Proprietary technologies allow it to be a price leader

1. ACMR 2019 10-K


5 2. Statista – Global Semiconductor industry
Leadership & Employees
LEADERSHIP EMPLOYEES
 Compensated through:  361 global employees
– Base salary – 32 admin, 89 manufacturing, 149 R&D,
– Performance driven cash bonuses 91 sales and marketing
(determined by comp. committee and  None represented by labor organizations
dependent on objective achievement)
– Long-term incentives (stock options)  Compensated through:
– Housing, health and welfare benefits – Base salaries
(further information not disclosed) – Stock options
– Restricted shares

Name and Principal Option All Other % of Revenue


Year Salary Bonus Total
Position Awards Comp. (2019, MM)
David H. Wang 2019 $229,742 $19,358 $325,000 $24,594 $598,694 0.56%
CEO and President 2018 189,373 34,519 — 12,985 236,877 0.22%
Mark McKechnie 2019 232,424 129,327 299,400 22,500 683,651 0.64%
CFO and Treasurer
Lisa Feng 2019 159,673 41,354 214,700 19,332 435,059 0.40%
CFO of ACM Research
(Shanghai), Inc.

1. ACMR 2019 10-K


6 2. AMCR 2019 Proxy (14A)
Valuation
FINANCIAL MODEL
 Weighted average implied share price is $77.93 for an upside of 28.9%
 Three methods of valuation: DCF (perpetuity & multiple), public comparables, and precedent
transactions
 Revenue forecast is driven by two assumptions
– Wafer wet-cleaning tools growth based on convergence with TAM (top-down analysis)
– Back-end assembly and packaging growth based on a higher unit demand from increased
strategic relationships and global presence
 Scenario analysis (best, base, & weak)

ACM Research Final Results Scenario: Base case


Lewis Taylor

Valuation Results
Method Implied Price Weighting
DCF (Perpetuity) $ 79.33 0.3x
DCF (Multiple) $ 169.52 0.2x
Weighted average comps $ 41.66 0.3x
Precedent transactions $ 38.66 0.2x

Average implied share price: $ 82.29


Median implied share price: $ 60.49
WA implied share price: $ 77.93

1. ACMR 2019 10-K 3. GCA Global


7 2. CapIQ Company profile & comps 4. Source Today – Semiconductor M&A
Questions?

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