ACM Research Shanghai reported revenue of RMB 3.54 billion in 1Q22, up 28.5% YoY, but归属净利润 was RMB 431 million, down 88.6% YoY, due to the recognition of deferred revenue. The gross margin increased by 1.8ppt to 47.16% due to the change in product mix. We maintain our 2022/2023/2024E EPS of 0.83/1.19/1.64 RMB and target price of RMB 112.00, based on 17.6x 2022E P/E, which is a 20% premium to the Wind consensus industry average of 14.7x. The company is expected to see a recovery in 2Q22, with the impact of the recent outbreak in Shanghai and surrounding areas. Despite the negative impact on operations, we believe that the company's device delivery and revenue recognition may accelerate in 2Q22 as work and production resume.
