Incident: The company released its semi-annual report for 2023. In the first half of the year, the company achieved revenue of 700 million yuan, +10.60% year-on-year, net profit of 79 million yuan, +1.18% year-on-year, minus non-return net profit of 70 million yuan, +6.83% year-on-year.

At 2023Q2, the company achieved revenue of 371 million yuan, +8.89% year on year, about +12.8% month on month, net profit of 43 million yuan, +1.01% year on year, about +19.4% month on month, after deducting non-return net profit of 37 million yuan, +6.07% year on year, and about +8.8% month on month.

Comment: 1. The industry is growing steadily under low demand, and the volume of electrostatic suction cups and ceramic heating plates is accelerating:

2023H1, in a situation where domestic and foreign industry demand is sluggish, the company's market share is steadily increasing, driving steady growth in the company's overall revenue and positive growth in performance. In terms of profitability, the company's gross margin was -2.24 pct to 25.90% year on year; with the increase in sales and management expenses, net profit margin was -1.05 pct to 11.26% year on year.

2. A major breakthrough in semiconductor equipment ceramics, and a significant increase in profit margins: The company has achieved batch shipments of ceramic products, electrostatic chucks and ceramic heaters for semiconductor equipment, and the domestic substitution trend continues to consolidate. Product technical barriers are extremely high, profitability is significantly better than the company's overall level, and profit margins are expected to increase significantly.

3. The optical module ceramic case is “outstanding”, 800G breaks through the leading optical module manufacturer: The company's high-speed optical module ceramic shell is “outstanding” in China. As orders for 800G optical modules continue to exceed expectations, the company has accelerated the development and verification of 800G ceramic products. As a scarce manufacturer of high-rate optical module ceramic cases in China, the company is expected to benefit deeply.

4. The silicon carbide main driver MOS is progressing smoothly, and the overseas market share of GaN continues to increase: the silicon carbide MOS used by the League of Nations is the first to break through the domestic market leader in new energy vehicles, and expansion is imminent; the overseas market share of GaN PA is steadily increasing, continuing to expand new business markets such as 6G and satellite communications.

5. Profit forecast and investment suggestions: The company is expected to achieve net profit of 5.99, 10.03, and 1,514 billion yuan in 2023-2025. The corresponding PE is 51.2, 30.6, and 20.3 times. The compound growth rate for the next three years is expected to exceed 50%, which is significantly underestimated.

Risk warning: Capacity expansion falls short of expectations; new product development progress falls short of expectations.