Incidents:

1. The company released its 2024 semi-annual report. 2024H1 achieved revenue of 1.497 billion yuan, a year-on-year increase of 21.23%; realized net profit attributable to owners of the parent company of 0.433 billion yuan, an increase of 15.65% over the previous year; and realized net profit deducted from non-mother 0.368 billion yuan, an increase of 19.77% year-on-year.

2. Judging from the Q2 single-quarter results, we achieved revenue of 0.816 billion yuan, up 32.03% year on year, up 20.00% month on month; realized net profit attributable to owners of the parent company of 0.231 billion yuan, up 27.89% year on year, up 14.03% month on month; realized net profit without return to mother of 0.197 billion yuan, up 40.01% year on year and 14.42% month on month.

24H1 performance continues to grow at a high level:

24H1's revenue and net profit were 149.7 billion yuan and 433 million yuan respectively, a significant increase over the same period last year. Among them, 24H1's revenue grew rapidly, and domestic substitution of a major series of semiconductor equipment progressed rapidly, and the company's share of CMP equipment continued to increase. The increase in net profit (+15.65%) and net profit after deducting non-net profit (+19.77%) of 24H1 was slightly lower than the increase in operating income (+21.23%), mainly due to share payment expenses, where the increase in related expenses was higher than the increase in operating income. The net cash flow from 24H1 operating activities was 0.372 billion yuan, a significant increase of 38.85% over the previous year. It was mainly due to the expansion of the company's business scale and the increase in sales repayments.

The implementation of the Lingang integrated circuit equipment R&D and manufacturing base project is expected to help business performance continue to grow:

The company plans to invest in the construction of the “Shanghai Integrated Circuit Equipment R&D and Manufacturing Base Project” in the Lingang New Area of Shanghai to carry out R&D, production and sales of special integrated circuit equipment. The total investment of the project is planned to be no more than 1.698 billion yuan. It is expected to be completed and put into use in 2026. After completion, the company's semiconductor equipment production capacity will be further expanded, the R&D and production of high-end semiconductor equipment will be promoted, and domestic and foreign markets will be rapidly deployed. In addition, the implementation of the project will help implement the “equipment+service” platform-based development strategy, diversify the product layout, enrich the company's product range, and create more space and new profit growth points for the company's future development.

“Equipment+Service” two-wheel drive:

In terms of IC equipment: 1) CMP equipment: the CMP machine UniversalH300 with a new polishing system architecture has been shipped in small batches; 2) Thinning equipment: the 12-inch ultra-precision wafer thinning machine Versatile-GP300 has received batch orders from leading companies in various fields; 3) Wet process equipment: SDS/CDS liquid supply system equipment has received batch purchase orders; 4) Measurement equipment: Obtain batch repeat orders from a leading integrated circuit manufacturer. Technical service aspects: 1) Wafer regeneration: professional wafer recycling foundry with Fab equipment and process technology services, and has received batch orders from many large production lines and long-term stable supply; 2) Key consumables and maintenance: further improve the performance of 12/8/6 inch CMP multi-zone polishing heads, and continue to carry out diversified development and verification of key consumables such as polishing heads.

Investment advice:

We expect the company's revenue from 2024 to 2026 to be 3.511 billion yuan, 4.565 billion yuan, and 5.478 billion yuan, respectively, and net profit to mother of 1.013 billion yuan, 1.393 billion yuan, and 1.442 billion yuan, respectively. Considering the acceleration of domestic substitution in the semiconductor device special equipment manufacturing industry, the company is developing new products smoothly, and the location layout is gradually improving. The company was given a valuation of PE41.00X in 2024, corresponding to a target price of 176.12 yuan. Give it a “buy-A” investment rating.

Risk warning:

The risk of new technologies, new processes, and new products not being industrialized as scheduled, the risk of industry and market fluctuations, the risk of international trade friction, and the risk of rising product production costs.