Event Overview: Company Releases 2024 Semi-Annual Report

[24H1]

The company achieved revenue of 1.497 billion yuan — in line with the forecast of 1.45-1.52 billion yuan, an increase of 21%; net profit to mother of 0.433 billion yuan — in line with the forecast of 4.25 to 0.445 billion yuan, an increase of 16%; net profit after deducting 0.368 billion yuan — in line with the forecast of 3.6 to 0.38 billion yuan, an increase of 20%; gross profit margin of 46.29%, flat year over year; net profit margin of 28.9%, -1.4 pcts year on year. 24H1's share payment expenses were high, reaching 49.59 million yuan. As a result, the increase in sales, management and R&D expenses was higher than the increase in operating income. Therefore, the increase in net profit to mother and net profit after deducting non-net profit was slightly lower than the increase in operating income.

[24Q2]

The company achieved revenue of 0.816 billion, an increase of 32% and a 20% increase; net profit to mother of 0.23 billion, an increase of 28% and 14%; net profit without return to mother of 0.2 billion, an increase of 40% and 14%; gross profit margin of 44.9%, -1 pcts year over year, -3 pcts month over month; net profit margin of 28.3%, -0.8 pcts year on year and -1.4 pcts month on month.

The competitiveness of CMP continues to increase, and the GP300/GM300 thinning machine was successfully expanded, and the sales scale of the company's CMP and other special equipment, wafer recycling and consumables services all increased to varying degrees over the same period. On July 15, the company launched its 500th 12-inch CMP. This move marks: 1) the quality of the company's products has been highly recognized by customers, and its core competitiveness continues to be strengthened; 2) the increase in CMP installed capacity has created more storage space for the wafer recycling/consumables business. The company developed the Versatile-GP300 all-in-one thinning and polishing machine, which stably achieved a 12-inch wafer in-chip grinding TTV <0.8 μm for front-end wafer manufacturing, and received batch orders from many leading customers in 2023. The 12-inch wafer thinning and laminating all-in-one machine Versatile-GM300 has been sent to domestic leading sealing and testing companies for verification.

Building a product matrix around CMP, a platform-based strategy is about to emerge 1) CMP, the leading product, welcomes structural upgrades and downstream expansion. The CMP Universal H300 with a new polishing system architecture has been shipped in small batches, and customer verification has been smooth; it is expected that the new model will be shipped 24H2 for three and a half generations of new models.

2) Thinning+cutting+cleaning+liquid supply+film thickness+wafer regeneration/consumables maintenance to create a product matrix. Thinning: The 12-inch thinning machine Versatile-GP300 has received batch orders from leading companies in many fields, and the 12-inch all-in-one Versatile-GM300 thinning and laminating machine has been sent to leading domestic sealing and testing companies for verification. Cutting: The 12-inch device has been sent to multiple customers for verification. Cleaning: 24H1. The brush cleaning equipment used for 4/6/8 inch compound semiconductors has passed the client's acceptance; the cleaning equipment for 4/6/8/12 inch sheet boxes has been ordered in small batches and is yet to be sent to the client for verification. Liquid supply and film thickness have been ordered repeatedly in batches; wafer recycling and consumables maintenance are expected to become new profit growth points.

3) After the company increased its capital in 23 years, it held 18% of its shares. The ion implanter products developed by Xinyu were successfully developed and shipped in small quantities.

HBM and advanced packaging core equipment suppliers, are expanding production in Shanghai to help accelerate the implementation of future business volume AI. HBM and advanced packaging involving multi-layer vertical stacking are expected to become important directions. The company's main CMP and thinning equipment are core equipment for stacking and advanced packaging, and are expected to benefit from the AI explosion driving demand for HBM and advanced packaging.

The company announced on August 15 that it will invest in the construction of an integrated circuit equipment R&D and manufacturing base in Shanghai. It plans to expand the production capacity of the company's core products and carry out innovative development and upgrades of new products or functions to help the company expand its product line and accelerate the industrialization of R&D results; the total investment of the project does not exceed 1697.81 million yuan, with its own funding sources and self-financing; the project construction period is expected to be 24 months.

Investment advice

We forecast the company's net profit for 2024-26 to be 0.99/1.35/1.68 billion yuan, respectively. We keep our forecast for the company's 2024-26 net profit unchanged, corresponding PE is 33/24/19 times. Huahai Qingke is the leading CMP equipment leader in mainland China. Strong Hengqiang's competitive advantage continues to be highlighted. At the same time, the company is actively developing various products, including thinning machines and cleaning machines, to grasp the growth of localized and advanced packaging. Maintain the company's “buy” rating.

Risk warning

The industry boom fell short of expectations, R&D progress fell short of expectations, and customer development fell short of expectations.