Core ideas:

The company announced that the deduction of Fei increased significantly compared with the same period last year. 22H1 revenue was 1.12 billion, up 21.67% over the same period last year; net profit from home was 81 million, down 45.92% from the same period last year, mainly due to the large amount of income from government subsidies received by 21H1 and the disposal of long-term equity investment; deducting 97 million of non-net profit, an increase of 128.12% over the same period last year; gross profit margin was 36.09%, an increase of 5.22pct over the same period last year.

Domestic substitution has made good progress, and the company's orders have maintained high growth. The company's main business is high-purity process integration systems, semiconductor equipment and optical sensors and optoelectronic components. In the field of high-purity process systems, the company has become a leader in the industry, breaking the market pattern previously monopolized by foreign gas companies. According to the company's semi-annual report and China bidding Network, as of June 30, 2022, the company's total new orders totaled 2.362 billion yuan, an increase of 37.33% over the same period last year, including 184 sets of special gas systems signed with SMIC Oriental, laying a good foundation for the company's annual order target of 4 billion.

Semiconductor process equipment business continues to develop. According to the company's 2021 annual report, the company began to lay out semiconductor equipment in 2015 and received orders in 2018. At present, it can provide wet trough cleaning equipment and wet monolithic cleaning equipment. In the first half of 2022, new orders for semiconductor process equipment totaled 806 million yuan, an increase of 73.09 percent over the same period last year; realized revenue of 466 million yuan, an increase of 73.09 percent over the same period last year, contributing 41.6 percent of revenue; and a gross profit margin of 35.11 percent, increasing 11.21pct over the same period last year.

The company's wet equipment progress from verification and initial orders to repeated orders for validated process machines, and the delivery of four sets of equipment less than 14nm in 22H1 will continue to grow with downstream demand in the future.

Profit forecast and investment advice. It is estimated that the 22-24 income will be 28.64, 38.91, 50,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000, and the current price will correspond to 29.3 times of 22-year PE. Reference to comparable companies, 45 times PE will be given in 2022, corresponding to a reasonable value of 55.35 yuan per share to maintain "buy".

Rating.

Risk hint. Downstream capital expenditure is lower than expected; core components import risk; industry competition leads to a decline in gross profit margin.