Brief performance review

The company disclosed its semi-annual report on August 22, 2024, and achieved revenue of 3.448 billion yuan in the first half of the year, an increase of 36.46% over the previous year; net profit to mother of 0.517 billion yuan, a year-on-year decrease of 48.48%.

Among them, Q2 achieved revenue of 1.843 billion yuan, a year-on-year increase of 41.37%, and realized net profit to mother of 0.268 billion yuan, a year-on-year decrease of 63.23%. The main reason for the decline in net profit due to the decline in net profit due to the company's sale of some shares of Tuojing Technology in '23, and the company had no proceeds from this equity disposal in '24. In addition, the company significantly increased its R&D efforts. The R&D investment in the first half of '24 was 0.97 billion, a significant increase of 110.84% over the previous year, and the R&D expenditure rate jumped to 16.47%.

Management analysis

Contract debt is growing rapidly, providing a driving force for the company's growth. In the first half of '24, the company produced a total of 833 cavities of special equipment, an increase of 420% over the previous year, laying a good foundation for this year's shipments. The balance of goods issued at the end of the period was about 2.766 billion, up 1.898 billion from the balance of 0.868 billion at the beginning of the period; the balance of contract liabilities at the end of the period was about 2.535 billion, up about 1.764 billion from the balance of 0.772 billion at the beginning of the period. Currently, orders are full, and we are optimistic about the release of full-year results.

Etching equipment has significant advantages and continuous breakthroughs. At present, many of the company's devices for the most critical etching processes in logic and memory chip manufacturing have entered the mass production verification stage. Primo UD-RIE, a high-power 400kHz bias radio frequency for ultra-high depth-to-width ratio etching, has proven mass production capability with etching ≥ 60:1 aspect ratio structures on production lines, while the company reserves avant-garde technology for etching higher aspect ratio structures (≥ 90:1). Furthermore, the company's wafer edge Bevel etching equipment has been developed and will soon enter customer verification.

The coverage of thin film deposition equipment continues to increase. The company's tungsten series thin film deposition products can cover all tungsten applications in memory devices, and has completed verification of CVD/HAR/ALD W tungsten equipment by many logic and storage customers, and obtained customer orders. In addition, the company has recently planned a variety of CVD and ALD devices to increase the coverage of film equipment. The EPI equipment research and development team formed by the company has formed independent intellectual property rights and innovative pretreatment and epitaxial reaction chamber design plans. At present, the company's EPI equipment has successfully entered the customer verification stage to meet the electrical and reliability requirements of the customer's germanium-silicon epitaxial growth process in advanced manufacturing processes.

Profit Forecasts, Valuations, and Ratings

The company's 24-26 revenue is expected to be 8.3/10.8/13.9 billion yuan, up 33%/30%/28% year on year; net profit to mother is 2/2.6/3.2 billion yuan, up 10%/32%/23% year on year, corresponding P/E of 52/40/32 times, maintaining a “buy” rating.

Risk warning

The semiconductor cycle fluctuates, downstream fab production expansion falls short of expectations, and new products are progressing faster than expected risks.