The company has two major businesses: advanced ceramic components and surface treatment. The company's advanced ceramic materials target a domestic market space of nearly 10 billion dollars, and the localization rate is less than 20%. The company covers leading customers such as North China Chuang, China and Micro, and Tuojing Technology. The localization rate is expected to gradually increase in the future. At the same time, module products such as high-end ceramic heaters are gradually being replaced by domestic products and rapidly released; surface treatment services currently focus on leading customers such as BOE and Huaxing Optoelectronics in the field of display panels, and form 14nm process technology reserves in the semiconductor field. In the future, semiconductors are expected to contribute new revenue and profit growth. point. The company's 24H1 revenue and profit grew at a high year-on-year rate, with plenty of on-hand orders, and sufficient momentum for future growth. It is recommended to focus on post-listing performance.

The company is a leader in advanced ceramic components in China, covering leading domestic pan-semiconductor customers. The company was founded in 2009, has been deeply involved in advanced ceramic materials for 15 years, expanded its surface treatment service business in 2015, and relied on the “National Science and Technology Major Project (02 Project)” to make technical reserves for high-value-added products such as ceramic heating plates. Since 2022, it has focused on developing products such as electrostatic chucks and ultra-high purity silicon carbide kits. Currently, the company's two main businesses are advanced ceramic material components and surface treatment services. ① Advanced ceramic material components can be used in semiconductors, display panels, lithium batteries, fuel cells, biomedicine, etc. Among them, semiconductor equipment is the most important application. The company's products are widely used in lithography, etching, ion implantation, deposition and other equipment, covering many leading domestic semiconductor equipment customers such as North China, China Micro, China Electronics, and Xinyuan Wei, etc.; ② surface treatment services Currently, it mainly focuses on the display panel field, covering leading customers such as BOE, Huaxing Optoelectronics, Youda Optoelectronics, and Tianma Microelectronics, and is gradually expanding into the semiconductor field.

Advanced ceramic components are being released rapidly, and 24H1 revenue and profit are growing at a high rate. 1) Revenue side: In 2019-2023, the company's revenue increased from 0.17 billion yuan to 0.48 billion yuan, and the CAGR was 22%. The company's main revenue comes from advanced ceramic components, benefiting from increased demand from downstream pan-semiconductor and new energy customers, increasing revenue from 0.1 billion yuan in 2019 to 0.4 billion yuan in 2023; surface treatment service revenue has declined since 2021, mainly due to the decline in consumer electronics sentiment and increased market competition; 24H1's revenue is 0.385 billion yuan, +64.3% year-on-year, mainly due to the recovery of downstream semiconductor and display panel prosperity, and the company's ceramic heaters, etc. Rapid product release; 2) Profit side: The company's net profit gradually increased in 2019-2022, and achieved net profit of 0.082 billion yuan in 2023, down 12% year on year, mainly due to a slowdown in revenue growth, and a year-on-year decline in gross margin compounded by an increase in R&D expenses; 24H1 achieved net profit of 0.139 billion yuan, +309% year over year, after deducting 0.136 billion yuan of non-net profit, +306% year over year, mainly due to revenue recovery of high year-on-year growth, and also used for semiconductor CVD and other equipment Ceramic heaters have been replaced by domestic products, generating high profits; 3) Ongoing orders: As of January 31, 2024, the company's on-hand order amount had increased to 0.195 billion yuan, an increase of 57% over the previous year. Among them, the amount in the semiconductor sector was 0.14 billion yuan, an increase of 224% year over year, and orders in the display panel sector were 24.78 million yuan, +15.8% year over year.

The domestic pan-semiconductor structural ceramics market is nearly 10 billion yuan, and there is plenty of room for improvement in the localization rate. According to Frost & Sullivan, the global and domestic pan-semiconductor structural ceramics markets were over 40 billion yuan and 8.7 billion yuan respectively in 2023, while the localization rate of advanced structural ceramic components in mainland China was only 19% in 2021. The main share was occupied by Japanese/European and American companies such as Kyocera Group, Ferrotec, and Japan Special Ceramics, and there is plenty of room for improvement in the localization rate. The company's advanced semiconductor ceramic component products cover leading semiconductor equipment manufacturers such as Northern Huachuang, Zhongwei, and Tuojing Technology, and has also expanded high-end products such as ceramic heaters, electrostatic chucks, and ultra-high purity silicon carbide kits. The domestic market space for the three high-end products is expected to reach about 2.5 billion yuan in 2023. The company supplies many ceramic heaters to manufacturers such as North China Chuang and achieve mass production, and is expected to be rapidly released this year; the 8-inch etching machine is being mass-produced, and the 12-inch product is being tested; the ultra-pure silicon carbide kit has received an order from North China Chuanghua , Some parts have been verified.

Surface treatment services focus on display panel customers, and the semiconductor sector is expected to contribute new growth points. In terms of external surface services, the company focuses on the field of display panels, providing cleaning, anodizing and spray services for LCD and OLED manufacturing equipment, covering leading customers such as BOE, TCL Huaxing Optoelectronics, Youda Optoelectronics, and Tianma Microelectronics. At the same time, the company is gradually expanding into the semiconductor field, providing surface treatment services for advanced ceramic components of advanced process equipment. It has formed a technical reserve for surface treatment in the 14nm process. It has passed 5 precision cleaning by Company A and spray certification by China and Micro. The semiconductor sector is expected to contribute new revenue and profit growth points in the future.

Investment advice. The company lays out two major businesses: advanced ceramic components and surface treatment. Advanced ceramic materials target the domestic market space of nearly 10 billion dollars, and the localization rate is less than 20%. The company covers leading customers such as North China Huachuang, China and Micro, and Tuojing Technology. The localization rate is expected to gradually increase in the future. At the same time, high-end ceramic heaters, electrostatic chucks, etc. are also gradually being replaced by domestic production, which is expected to be rapidly released; surface treatment services currently focus on leading customers such as BOE and Huaxing Optoelectronics in the field of display panels, gradually expanding from panel etching equipment to CVD equipment and forming 14nm process technology reserves in the semiconductor field. Semiconductors are expected to contribute new revenue and profit growth points in the future. We expect the company's revenue for 2024/2025/2026 to be 0.81/1.06/1.25 billion yuan, and the estimated net profit to mother will be 0.28/0.37/0.45 billion yuan, respectively. Based on the market value issued, the dynamic PE is 12.3/9.5/7.8 times lower than that of comparable companies. We recommend focusing on it after listing.

Risk warning: Risk of technology development and marketing, risk of technology leakage and loss of core technical personnel, risk of high customer concentration, risk of increased market competition, risk of dependence on imports of some advanced ceramic powders, risk of lifting the ban on future shares after listing.