The month-on-month growth rate of Chipboard Micropack's profit in 2024Q2 exceeded operating income. PCB-related businesses are driven by demand for technological upgrades and overseas expansion. The pan-semiconductor-related business combines multiple applications and products. Maintain a buy rating.

Key points to support ratings

The month-on-month growth rate of 2024Q2's profit to mother exceeded market expectations. Chippack predicts 2024H1 revenue of about 4.35 to 0.451 billion yuan, with a median value of about 0.443 billion yuan, YoY +39%; net profit to mother of about 0.99 to 0.103 billion yuan, median value of about 0.101 billion yuan, YoY +39%. If calculated at the median value, Chipboard Micropack's 2024Q2 revenue was approximately 0.245 billion yuan, QoQ +24%, YoY +51%; net profit to mother was 0.061 billion yuan, QoQ +53%, and YoY +56%. The month-on-month growth rate of Chipboard Micropack's net profit in 2024Q2 surpassed operating income, indicating that the company's profitability is picking up.

PCB technology upgrades+overseas expansion drive equipment demand. On the one hand, large computing power drives the upgrading of PCBs to high frequency and high speed, and the expansion of production of high-end PCB products such as multi-layer boards/HDI boards/flexible boards/IC carrier boards has spawned demand for NEX series direct writing lithography equipment in the high-end solder mask market. On the other hand, the overseas expansion of PCB manufacturers also boosted capital expenses and spawned a boom in equipment demand. Chipset deployed a global strategy ahead of schedule and increased its market layout in Southeast Asia. It has now completed the establishment of a subsidiary in Thailand.

Multiple applications and products are combined in the pan-semiconductor field. 2024H1's advanced packaging equipment is growing at a good rate, carrier board equipment continues to grow steadily, and display equipment is also making good progress. According to the official website of Chipboard Micropack, since the beginning of 2024, Chipboard Micropack WLP2000 for Bumping wafer-level advanced package direct writing lithography equipment has been delivered continuously and repeatedly to leading advanced packaging customers. The company is also actively deploying new products such as bonding, alignment, and laser drilling equipment.

valuations

Chipboard's 2024/2025/2026 EPS is expected to be 1.87/2.37/2.73 yuan respectively.

As of the close of July 23, 2024, the total market value of Chipboard's micro package was about 7.53 billion yuan, corresponding to 2024/2025/2026 PE, 30.6/24.2/21.0 times, respectively. Maintain a buy rating.

The main risks faced by ratings

Downstream demand falls short of expectations. Verification of the new product is progressing less than expected. The competitive landscape in the market deteriorated. Product prices are declining.