The company is a leading domestic back-end testing equipment platform-based enterprise, and occupies a certain market share in the fields of traditional digital-analog hybrid testers, power testers, and sorters. The company's high-end digital SoC testers and three-temperature sorters are being rapidly deployed, and probe stations are also gradually being developed with testing machines. In the future, new products such as storage testing machines and front-channel measurement will continue to achieve endogenous growth. At the same time, the company will expand revenue and profits, expand high-quality customer resources, and improve AOI's technical strength on the other. Product matrices such as sorters and testing equipment . We covered it for the first time and gave it an “increase in holdings” investment rating.

Focusing on back-end testing equipment, endogenous growth+epitaxial mergers and acquisitions lead to high growth. The company's main products include testing machines, sorters, probe stations, AOI equipment, etc., which basically cover all categories of back-end testing equipment. Through the extension of products from low-end to high-end, such as digital-analog mixing to digital SoC testers, and from room temperature to three-temperature sorters, the company also actively extended mergers and acquisitions, and acquired Singapore STI, a world-renowned supplier of integrated circuit testing equipment, in 2019. It completed the acquisition of Malaysian EXIS, a turret sorter manufacturer, in 2023. On the one hand, it increased revenue and profit volume. Sun, moonlight, etc. High quality customer resources, and improve product matrices such as turret sorters and AOI testing equipment.

In 2018-2022, the company's revenue increased from 216 million yuan to 2.58 billion yuan, with a CAGR of 85.8%. Among them, the sorter and testing machine business contributed the most important source of revenue, and always contributed more than 95% of revenue in 2018-2022; 23H1, the industry boom affected the pace of downstream production expansion. The company's traditional testing and sorter business revenue was under pressure year-on-year. At the same time, the pace of short-term customer orders also affected the revenue performance of digital SoC testing machines to a certain extent. The company's 23H1 test and sorter revenue was 250 million yuan and 430 million yuan, a year-on-year decline of 48% and 33%, respectively.

The global semiconductor back-end testing equipment market space is about 7.5 billion US dollars, and the localization rate of equipment such as digital SoC testing machines is still low. IC post-test equipment is mainly divided into testing machines, sorters, and probe stations. The testing process includes IC design verification, wafer testing (CP testing), and chip product testing (FT testing). The back-end test equipment is mainly aimed at external packaging and testing (OSAT) vendors. There are also some IC designs and IDM purchases testing machines for IC design verification. According to SEMI, the global semiconductor package testing equipment market size in 2022 was about 13 billion US dollars, of which back-end test equipment was about 7.5 billion US dollars. In 2021, testing machines, sorters, and probe stations accounted for 63%, 17.4%, and 15.2%, respectively. Currently, test equipment is mainly monopolized by overseas manufacturers such as Teraida and Edwin, and probe stands/sorters are mainly monopolized by Tokyo Seimitsu, Tokyo Electronics, etc. The localization rate is high in the fields of sorters and digital-analog hybrid testers, but there is still some room for localization in the fields of digital SoCs, storage testers, and probe stations.

Rapid release of digital SoC testers, three-temperature sorters, etc., storage testing machines, front-end inspection/measurement equipment, etc. further open up space for future growth. In the field of testing machines, according to SEMI data, digital SoC testing machines account for 60%, and storage, analog mixing, and RF testing machines account for 21%, 15% and 4% respectively. The company's digital-analog hybrid testing machine technology is mature, the digital SoC testing machine D9000, etc. are being rapidly released, and downstream customers continue to expand. The company is expected to expand further in the field of storage testing machines in the future; in the field of sorters, the company has formed a comprehensive layout of turret, translational, and gravity sorters. The translational three-temperature sorter is the main growth engine, and can cover temperatures of -55 to 150℃ The number of stations is up to 16, and the maximum production capacity is up to 1,200 pieces per hour, and can meet vehicle grade IC testing requirements; in the field of probe stations, the company's products support almost all 8/12 inch CP test requirements, and has now also begun to be gradually quantified; in the field of front-end testing equipment, according to Gartner, the global front-end inspection/measurement market will account for about 12% in 2022, corresponding to a space of about US$12.5 billion. The company has enhanced its AOI optical inspection capabilities through the acquisition of STI, forming the iFOCUS series of front-end inspection equipment, etc., and is aimed at Semiconductor critical process size measurement requirements We have developed a fully automated critical size measurement device, NanOX-6000.

Investment advice. Changchuan Technology's products cover digital-analog hybrid testers, digital testers, sorters, probe stations, etc., forming a platform-based layout of post-test equipment. The company's traditional digital-analog hybrid testing machines, sorters, etc. are mature, digital testing machines and three-temperature sorters are rapidly being released, downstream customers continue to expand, and probe stations are gradually being developed. In the future, equipment such as storage testers and front-end inspection/measurement equipment is expected to further open up growth space, with plenty of momentum for endogenous growth. At the same time, the company has extended mergers and acquisitions of STI and EXIS to accumulate high-quality overseas customer resources, improve the product matrix, and supplement technical shortcomings while increasing revenue and profits. We expect the company's revenue for 2023/2024/2025 to be 28.7/39.0/4.97 billion yuan, corresponding PS to 8.1/6.0/4.7 times; net profit to be 2.48/798/1,234 million yuan, respectively, and corresponding PE to 94.2/29.2/18.9 times. Covered for the first time, giving an “increase in holdings” investment rating.

Risk warning: Continued weakness in downstream demand, risk of new product development and sales falling short of expectations, loss of R&D talent, and supply chain security.