Global acquisitions to build an electronic materials platform company

The company was founded in 1997, started with foaming agents, then entered the flame retardant industry. It landed in small and medium boards in 2010, and further expanded its business to insulation composite panels in 2017. It is currently the only supplier of LNG insulation panels certified by GTT and the Classification Society in China. Beginning in 2016, it successively acquired Zhejiang Huafei Electronics, Chengdu Kemet, Jiangsu Xianke, the color photoresist division under LG Chemical, and Jiangsu Ketmey to expand its business into the fields of silicon powder, electronic specialty gases, semiconductor precursors, color photoresists, and TFT-PR positive photoresists. In 2023, the company achieved revenue of 4.738 billion yuan, a record high. Photoresists and precursors contributed the main revenue.

Strong performance in the LNG shipping market. The company has full orders for insulation panels, and continues to contribute to performance

Greenhouse gas emission reduction policies continue to stimulate natural gas consumption, and the Russian-Ukrainian conflict has forced a surge in demand for European shipping LNG. The LNG shipping market has performed strongly in recent years, and the number of orders for LNG carriers is at its highest level in history in nearly 10 years. LNG insulation panels are essential in the liquefied natural gas transportation process. Yaktech is the only domestic supplier. Currently, there are plenty of handheld orders, and it will continue to contribute to performance in recent years.

Against the backdrop of an eastward shift in panel production capacity, photoresist products fully benefit from localized replacement needs

China shows that the localization rate of photoresists is low. The localization rate of color photoresists is only 6.4%. High-end categories still need breakthroughs. The company's photoresist products include color photoresists, TFT adhesives, and OCPS adhesives. It is the core supplier of panel manufacturers such as LG Display, BOE, and Huaxing Optoelectronics. In the context of panel production capacity moving eastward, it has fully benefited from the replacement needs of localization. The photoresist project at Xianke's factory has been successfully verified on the client side. It is expected to be put into operation one after another in 24 years, and the domestic market share is expected to increase further after the release of new production capacity.

Is computing power driving rapid growth in demand for HBM, further boosting demand for precursors? The rapid development of AI models places higher demands on memory chips. Currently, high-end AI server GPUs equipped with HBM chips have become mainstream, and demand for high-bandwidth memory chips (HBM) is expected to usher in a phase of rapid growth. As the number of HBM stacked DRAM chips gradually increases to 8, 12, and 16 layers, driving the demand for precursors to continue to grow. According to CICC Enterprise Credit statistics, the global precursor market is expected to reach 3.66 billion US dollars in 2028, with a compound growth rate of 9.45% in 2021-2028; China's precursor market is expected to reach 1.157 billion US dollars in 2028, with a compound growth rate of 9.99% in 2021-2028. The company is one of the world's leading precursor suppliers, with a current production capacity of 500 tons. The main precursor products will achieve localized mass production in 2024 to meet customer production expansion needs.

Risk warning: Risk of downstream demand falling short of expectations, risk of product verification progress falling short of expectations, risk of increased market competition, risk of raw material price fluctuations.