Incident: On August 22, Chipset released its 2024 semi-annual report. In the first half of 2024, the company achieved revenue of 0.449 billion yuan, an increase of 41.04% year on year; net profit to mother was 0.101 billion yuan, up 38.56% year on year, after deducting non-return net profit of 0.099 billion yuan, an increase of 45.84% year on year.

Accounting standards have been adjusted, and the overall profit level remains high. The Ministry of Finance issued the “Compilation 2024 of the Guidelines for the Application of Accounting Standards for Enterprises” in March 2024, which stipulates that guarantee fees should be included in operating costs. The impact amount for the first half of 2024 was about 0.02 billion yuan. After the accounting standards were adjusted, the company's consolidated gross margin for the first half of 2024 was 41.88%, and the company's gross margin before the adjustment was 46.33%. In terms of net profit, the company's net sales margin for the first half of 2024 was 22.40%. Compared with 22.81% in the first half of 2023, there was little change, and the overall profit level remained high.

The market share in the field of high-end PCB equipment continues to increase, actively expanding the Southeast Asian market. The company strengthened the product upgrade of PCB equipment from the two dimensions of R&D and production expansion, promoted a continuous increase in the market share of high-end PCB products such as multilayer boards, HDI boards, flexible boards, and IC carrier boards, and simultaneously increased production of NEX series direct writing lithography equipment in the high-end solder mask market. At the same time, more and more circuit board companies are starting to invest and build factories in Southeast Asia. Currently, the company is expanding rapidly overseas, export orders are performing well, and the growth of overseas markets will continue to drive up revenue.

The field of pan-semiconductor equipment has blossomed a lot, and advanced packaging equipment is progressing smoothly. According to the company's 2024 semi-annual report, 1) IC carrier board field: Advanced packaging drives the growth of the ABF carrier board market, and the company's carrier board device MAS4 with a resolution of 4 μm was successfully verified on the client side. 2) Advanced packaging field: Currently, the company has laid out direct writing lithography equipment+wafer aligning machine+wafer bonding equipment in the field of advanced packaging. In addition, it has also laid out the technical roadmap for measurement, exposure, and inspection required for advanced packaging. 3) Other fields: The company's first mask plate making equipment to meet the 90nm node plate making requirements has been verified by the client, and the company will also advance the research process of 90nm-65nm plate making and lithography equipment; the company is actively entering the supply chain of leading customer BOE. Currently, screen sensor RTR equipment has been shipped to BOE, and the LCD process exposure coding mass production equipment is also about to be shipped.

Investment advice. With the steady growth of the company's PCB equipment shipments combined with the gradual expansion of pan-semiconductor equipment, we expect the company to achieve revenue of 1.16/1.59/1.99 billion yuan in 24-26, achieve net profit of 0.27/0.36/0.47 billion yuan, and maintain the “buy” rating with PE corresponding to the market value on August 26 at 27/20/15 times, respectively.

Risk warning: Downstream demand falls short of expectations; industry competition increases risk; company's new business development falls short of expected risk, etc.