Key points of investment

The company announced its 2024 semi-annual results announcement. In the first half of the year, it achieved operating income of 2.404 billion yuan, an increase of 49.33%; net profit to mother of 0.443 billion yuan, an increase of 0.85%; after deducting non-net profit of 0.435 billion yuan, a year-on-year increase of 6.92%; and basic earnings per share of 1.02 yuan/share.

Benefiting from strong demand in the domestic market and the sharp increase in revenue scale, the company's revenue increased by 49.33% year-on-year in the first half of the year due to the continued strong demand for equipment in the semiconductor industry in China. Affected by equity incentive expenses, the company's expense ratio increased significantly during the period, and profitability was stable year-on-year. In the first half of 2024, the sales expense rate/management expense ratio/R&D expense ratio were 9.88%/6.48%/14.40%, respectively, up 1.97 pct/2.36 pct/1.17 pct. The company's Q2 performance improved markedly. The company achieved operating income of 1.483 billion yuan, up 49.14% year on year and 60.90% month on month; net profit to mother of 0.363 billion yuan, up 17.66% year on year, up 352.71% month on month; gross margin/net margin was 53.39%/24.49%, all with significant month-on-month improvements.

Cleaning/electroplating/advanced packaging wet equipment has reached the international advanced level. The company's main products include semiconductor cleaning equipment, semiconductor electroplating equipment, and advanced packaging wet equipment. Some core technologies have reached the leading or advanced level in the world, and some models have been mass-produced in 28nm and below, 3DNAND, 18/19nm and below DRAM processes. In addition, the company will soon deliver the first PECVD equipment to IC customers in China. Two new product lines, this device and Qiandao Glazed Imaging Equipment, will double the size of the company's global serviceable market.

Profit Forecasts, Valuations, and Ratings

The company is a leading domestic leading cleaning equipment, and advanced packaging equipment is expected to benefit from increased industry demand. We expect the company's 24-26 revenue to be 5.488/6.959/8.034 billion yuan, respectively, up 41.13% %/ 26.82%/15.45% year on year; net profit to mother will be 1.231/1.578/1.937 billion yuan, respectively, with year-on-year growth rates of 35.24%/28.17%/22.70% respectively. EPS was 2.82/3.62/4.44 yuan/share, respectively. Maintain a “buy” rating.

Risk warning: Downstream customer construction progress falls short of expectations; R&D progress falls short of expectations.