Core supplier of advanced packaging lithography+electroplating wet chemicals. The company has two major industrial segments: electroplating solutions and supporting reagents and photoresists and supporting reagents, which are widely used in integrated circuits, new electronic components, and display panels. The company's market share in the domestic packaging and electroplating sector is over 20%, and its share in Changdian Technology has reached 50%. Aiming at advanced packaging market opportunities, the company expanded production of 12,000 tons of semiconductor special materials projects. The proportion of products used in the company's advanced packaging increased from 12.61% in 2020 to 20.62% in 2022.

Electroplating solution and ancillary products: Advanced packaging drives demand, and the company focuses on breaking through the blasting process. According to Techcet's forecast, the global semiconductor electroplating materials market will exceed 1 billion US dollars in 2022, and RDL and copper columns in advanced packaging will continue to drive market growth. As the diameter of baffles decreases, the requirements for electroplating chemicals continue to rise. The company's electroplating products are mainly used in the Binding process in advanced packaging. The company's electroplating copper-based liquid has achieved mass production and entered the Huatian Technology supply chain; the electroplating tin-silver additive has been verified by Changdian Technology. The company's market share in the domestic packaging electroplating sector exceeds 20%. Since 2019, it has become the exclusive supplier of electroplating solutions for Ruisheng Technology, with a supply share of 50% in Changdian Technology.

Photoresists and supporting reagents: Breaking the US-Japan monopoly on semiconductor materials, the company actively lays out the advanced packaging track. In 2022, the market size of g/i line photoresist in China was 914 million yuan, of which the g/i line photoresist used for packaging was 547 million yuan. The domestic production rate of g/i line photoresist was less than 20%, so there is huge room for localization. The company's latest self-developed g/i-line negative photoresist is gradually being supplied in batches, and the scale of mass production of newly developed etching solutions has increased. Advanced packaging technology is being iterated at an accelerated pace, and the demand for photoresists has further increased due to the increase in the number of layers in the RDL process. Out of the company's 12,000-ton semiconductor special materials project, the production capacity of 0.51,000 tons is planned for photoresist and supporting reagents, expanding production to meet industry opportunities.

Profit forecast and investment recommendations: We expect the company to achieve revenue of 391/4.76/571 million yuan and net profit of 0.34/0.51/669 billion yuan from 2023-2025, corresponding to PE150/101/74x. We are optimistic that the company will continue to expand the electroplating and photoresist product matrix in the field of advanced packaging, continue to increase its share among customers, and give it a “highly recommended” rating.

Risk warning: Downstream demand falls short of expectations. Competition in the industry is intensifying. The company's new product development progress fell short of expectations.