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  "documentTitle": "ACM Research, Inc. (ACMR)",
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  "presentationDate": "2025-01-29 00:00:00",
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  "notes": "The slide combines financial projections with a qualitative assessment of geopolitical risk.",
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      "text": "In our model, we assume a gradual decline in DIOs from over 700 at FYE 2023 to 400 days by 2039, a level which is still 24% higher than the average of 322 days from 2016 to 2020.",
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      "text": "ACMR Historical and Projected Free Cash Flow ($M)",
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      "text": "Free Cash Flow: $400M",
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      "text": "On December 2, 2024, the U.S. added ACMR’s subsidiaries ACM Shanghai and ACM Research Korea Co., Ltd. (“ACM Korea”), along with 138 other companies related to semiconductor manufacturing in China, to its Entity List under its Export Administration Regulations. These regulations restrict U.S. suppliers from exporting products to ACM Shanghai and ACM Korea without a special license. They would also restrict certain non-U.S., non-China suppliers from supplying these entities if certain foreign direct product (FDP) rules apply. In reality, this is only the latest iteration of U.S. export restrictions to the Chinese semiconductor industry, a Biden policy which initially began in 2022, and ACM and other Chinese semiconductor companies have long been pivoting to non-U.S. suppliers and suppliers that can",
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      "text": "Crucially, we expect ACMR to undergo a working capital normalization over the coming years driven by (1) an increase in repeat tools as a percent of total shipments, (2) the maturation of existing customer relationships, (3) the qualification of the large number of new products currently being introduced to market, and (4) international customers, which are likely to exhibit more supplier-friendly purchasing behavior, accounting for a growing portion of revenue. In our model, we assume a gradual decline in DIOs from over 700 at FYE 2023 to 400 days by 2039, a level which is still 24% higher than the average of 322 days from 2016 to 2020. As a result, we think ACMR can generate attractive cash flows in the coming years.",
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      "text": "In January 2024, ACMS announced that it intends to sell 43.6 million shares, which would reduce ACMR’s stake to 74.6%. While the timing is indeterminate, we anticipate the transaction likely occurs in 2025. The company has guided investors to expect that funds will be used to invest in growth. Yet, with a transition to cash generation on the horizon and the approval by ACMS of a $38 million dividend payment to its shareholders by the end of 2024, some analysts covering the company have raised the prospect of a return of capital to ACMR shareholders.",
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      "text": "Source: ACMR SEC filings and Kerrisdale analysis",
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      "text": "VIII. Geopolitics and “China Risk”",
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      "text": "Export Restrictions",
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