Incidents:

1. The company released the 2024 semi-annual report. 2024H1 achieved revenue of 0.694 billion yuan, a year-on-year decrease of 0.29%; realized net profit attributable to mother 0.076 billion yuan, a year-on-year decrease of 43.88%; and realized net profit deducted from non-mother 0.036 billion yuan, a year-on-year decrease of 65.52%.

2. Looking at Q2's single-quarter results, we achieved revenue of 0.449 billion yuan, up 10.31% year on year and 84.02% month on month; realized net profit of 0.06 billion yuan, a decrease of 13.73% year on year and an increase of 275.54% month on month; realized net profit without return to mother of 0.027 billion yuan, a decrease of 41.25% year on year and an increase of 214.52% month on month.

24Q2 performance increased significantly from month to month

2024H1 achieved revenue of 0.694 billion yuan, which was the same year on year. The main reasons: 1) Q1 revenue fell 15.27% year on year due to factors such as inventory order structure, production delivery and acceptance cycle; 2) Q2 order delivery and acceptance conditions were good, and revenue increased 10.31% year on year.

24H1 achieved net profit of 0.076 billion yuan to mother, a year-on-year decrease of 43.88%. The main reasons are:

1) In the first half of the year, R&D iterations and new product reserves were carried out around the three major fields of Qiandao Track, Qiandao Chemical Cleaning, and Advanced Packaging. R&D investment was 0.117 billion yuan, an increase of 52.00% over the previous year; 2) The increase in the number of employees and share payments in the first half of the year led to an increase of 35.87% year-on-year in management expenses and sales expenses. Looking at a single quarter in the second quarter, 24Q2 achieved revenue of 0.449 billion yuan, +10.31% year over month; realized net profit and net profit of 0.60 and 0.27 billion yuan without return to mother, -13.73% and -41.25% year over year, and +275.54% and 214.52% month-on-month. The pace of order delivery and acceptance in Q2 returned to normal, and revenue growth resumed.

The verification of advanced process gluing and imaging equipment is progressing smoothly. The company with the highest number of manual orders is a leader in the domestic gluing development segment. The products have successfully achieved full coverage of mature process nodes of 28 nm and above in the field of advanced wafer processing, and advanced process technology at 14 nm and below is also being verified in an orderly manner. In addition, the company has maintained a leading position in the industry for a long time in the fields of front-end physical cleaning, advanced back-end packaging, and compound semiconductors. In the first half of 2024, the company signed a new order of 1.219 billion yuan, an increase of 30% over the previous year. Among them, new orders for Qiandao gluing and imaging maintained good year-on-year growth, and new orders for advanced packaging and small-size applications increased significantly. New orders for temporary bonding and unbonding of new products used in the Chiplet field increased more than tenfold year over year, and the company's strategic new product Qiandao single-piece high-temperature sulfuric acid chemical cleaning equipment also received orders from important domestic customers. By the end of June 2024, the company's on-hand orders exceeded 2.6 billion yuan, a record high.

The layout of cleaning equipment continues to expand, and high-temperature sulfuric acid cleaning equipment is expected to break the absolute monopoly of foreign countries

On August 30, 2024, the company launched the first Qiandao single-piece high-temperature sulfuric acid chemical cleaning machine KS-CM300 at the new Lingang factory area in Shanghai to carry out process verification. This machine is the first high-end equipment independently developed by the company's Shanghai subsidiary. The high-temperature SPM cleaning process for the machine is recognized by the industry as one of the processes with the highest performance requirements in the 28nm/14nm process, and is also the most difficult and challenging wet process in the industry. The equipment developed by the company is expected to break the absolute monopoly of foreign leaders on high-temperature sulfuric acid cleaning technology and provide a stable performance growth point for the company's future development.

Investment advice:

We expect the company's revenue from 2024 to 2026 to be 2.232 billion yuan, 3.192 billion yuan, and 4.149 billion yuan, respectively, and net profit to mother of 0.328 billion yuan, 0.486 billion yuan, and 0.584 billion yuan, respectively. Considering the recovery of the semiconductor industry, the company's new orders for glue-coated imaging equipment have increased. The company was given a valuation of PE50.00X in 2024, corresponding to a target price of 81.50 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.