Description of the event

Huahai Qingke released its 2024 mid-year report. 2024H1 revenue was 1.497 billion yuan, up 21.2% year on year; net profit to mother was 0.433 billion yuan, up 15.7% year on year; after deducting non-net profit of 0.368 billion yuan, up 19.8% year on year. Among them, 2024Q2's revenue was 0.816 billion yuan, up 32.0% year on year, up 20.0% month on month; net profit to mother was 0.231 billion yuan, up 27.9% year on year, up 14.4% month on month, after deducting non-net profit of 0.197 billion yuan, up 40.0% year on year and 14.5% month on month.

Incident comments

Revenue in the second quarter reached a record high, and profitability remained high. Benefiting from the development of the semiconductor equipment market and the competitive advantage of the company's products, the company's revenue from CMP equipment, supporting materials, wafer recycling, technical services, and wet process equipment has increased significantly since 2024, driving the company's revenue and net profit to a high level of growth. Among them, 2024Q2 revenue reached 0.816 billion yuan, which is a new high for a single quarter in recent years. The company's products are highly competitive, and large-scale effects continue to show, and profitability remains high. 2024H1 gross margin reached 46.3%, and net profit reached 28.9%.

There are plenty of orders on hand, which is expected to support future performance growth. As of the end of 2024Q2, the company's inventory was 3.08 billion yuan, up 0.35 billion yuan from the end of 2024Q1, and contract liabilities were 1.34 billion yuan, up 0.12 billion yuan from the end of 2024Q1. At the end of 2024, the company's inventory and contract liabilities both reached record highs, proving that the company has plenty of orders on hand and is expected to support continued growth in future performance.

We have invested heavily in research and development, and have made positive progress in many fields. The company maintains high investment in R&D, promotes the renewal and iteration of existing products and the development and expansion of new technologies and products, and has achieved positive results. 1) CMP equipment, a new polishing system architecture, the CMP machine UniversalH300 has been shipped in small batches, and the new model for third-generation semiconductors is expected to be sent to customers for verification; 2) Thinning equipment, the 12-inch ultra-precision wafer thinner Versatile-GP300 has received batch orders from leading companies in various fields, and the 12-inch wafer thinning and coating all-in-one machine Versatile-GM300 has been sent to leading domestic sealing and testing companies for verification; 3) Cutting equipment, The 12-inch wafer edge cutting equipment has been sent to many customers for verification; 4) cleaning equipment, brush cleaning equipment used for 4/6/8-inch compound semiconductors has been approved by the client; small-batch orders for 4/6/8/12 inch chip box cleaning equipment have been ordered in small quantities and are to be sent to the client for verification; 5) The liquid supply system has been purchased in batches to achieve industrial application in many domestic integrated circuit customers; 6) Film thickness measurement equipment has been sent to many customers for verification, and batch repeat orders have been obtained from a leading integrated circuit manufacturer. 7) The wafer recycling business and key consumables and maintenance services will become new profit growth points for the company.

Accelerate the construction of production and R&D bases and consolidate the leading position. The “Huahai Qingke Integrated Circuit High-end Equipment R&D and Industrialization Project” implemented in the Beijing Economic and Technological Development Zone has completed the main structure and is expected to be completed and accepted by the end of 2024; the Tianjin Phase II project is progressing smoothly and is expected to be completed and accepted by the end of 2024; at the same time, the company announced that it plans to invest no more than 1.698 billion yuan to build an R&D and manufacturing base in Lingang, Shanghai. The construction of a series of production and R&D bases will further expand production capacity, promote the company's platform-based strategic layout, and consolidate the company's leading position.

It is estimated that in 2024-2026, the company is expected to achieve net profit of 1, 1.3, and 1.6 billion yuan, corresponding to PE 32, 25, and 20 times PE, maintaining a “buy” rating.

Risk warning

1. The risk that the increase in the localization rate falls short of expectations;

2. The risk of relative concentration of customers.