Shares of EPIWORLD (02726) climbed more than 7% during the morning session, last trading up 7.15% at HK$88.40 with turnover reaching HK$24.62 million.

Zhongtai International has released a research report initiating coverage on the company with a "Buy" rating, setting a target price of HK$166.30 based on a 22x forecast price-to-sales multiple for 2027.

The brokerage noted that EPIWORLD is the world's largest supplier of silicon carbide epitaxial wafers, holding a 31.6% global market share in 2024. It is also the first company globally to achieve commercial delivery of 8-inch silicon carbide epitaxial wafers and has taken the lead in establishing the world's only international standard for silicon carbide epitaxy.

Driven by rising demand from AI and new energy vehicles, along with a higher mix of large-diameter products and improved capacity utilization, Zhongtai International expects the company's revenue to grow 77.5% and 107.2% year-over-year in 2026 and 2027, respectively. Gross margins are projected to expand by 5.2 and 3.2 percentage points to 30% and 32.5% during the same period.

On the customer front, EPIWORLD is the first Chinese silicon carbide epitaxial company to enter international supply chains on a large scale, counting four of the world's top five silicon carbide device makers as clients—all of which are part of NVIDIA's AI data center supply chain. Additionally, eight of the world's top ten power device manufacturers are long-term partners.

Given the lengthy certification cycle for silicon carbide epitaxial products, customer loyalty remains exceptionally strong. The company's continuously expanding global customer base, combined with its scale, technology, and customer relationships, forms a formidable competitive moat that is difficult to replicate.