Description of the event

Recently, Wanye Enterprise released its 2024 semi-annual report.

2024H1 achieved revenue of 0.201 billion yuan, a year-on-year decrease of 48.37%; realized net profit to mother of 0.071 billion yuan, a year-on-year decrease of 159.70%; realized deducted non-net profit of 0.008 billion yuan, a year-on-year decrease of 131.18%; and gross margin of 59.77%, a year-on-year decrease of +10.99pct.

Incident comments

Revenue from the real estate and semiconductor businesses has slowed, and the parts business has grown significantly. 2024H1's main business revenue was 0.12 billion yuan, a year-on-year decrease of 68.66%, of which real estate business revenue was 0.089 billion yuan, a year-on-year decrease of 68.31%; special equipment manufacturing revenue was 0.031 billion yuan, a year-on-year decrease of 69.58%. The company's real estate sector has entered the final stage, and the semiconductor equipment business is affected by the pace of confirmation from downstream customers, and there is some uncertainty about revenue growth. In addition, 2024H1 achieved operating income of 0.393 billion yuan, a year-on-year increase of 14.47%; net profit of 0.057 billion yuan, an increase of 57.41% year-on-year.

Compart Systems, a subsidiary of Zhejiang Prexin, can provide one-stop processing services from component raw materials to component assembly, serving many world-renowned integrated circuit equipment customers for a long time and maintaining stable supply relationships. Benefiting from the growth trend of the global semiconductor equipment industry, revenue growth, and significant increase in profitability.

Strengthen investment in R&D and pay attention to the growth trend of the ion implanter business. 2024 H1's R&D investment was 0.076 billion yuan, up 41.24% year on year, accounting for 37.81% of revenue. Since 2024, the company's Casteon and Jiaxin Semiconductor have received a total of about 0.22 billion yuan in integrated circuit equipment orders. In the field of ion implantation equipment, Kaishitong has already placed repeated orders in batches from 3 leading customers, and 2 new customer orders have been added. Up to now, Kaishitong's main products have achieved remarkable results in customer sales: the number of low-energy large-beam ion injector customers has surpassed 10; the number of ultra-low temperature ion implanter customers has exceeded 7; and the number of high-energy ion implanter customers has also surpassed 2. Since 2020, Kaishitong has signed a total of nearly 60 orders for 12-inch integrated circuit ion implanters, with a total order amount of 1.4 billion yuan. It has delivered 30 units, mainly serving applications such as advanced logic, storage, power devices, and CIS image sensors. Ion implanters are difficult to develop, and the level of localization is low. As a leading domestic enterprise, Kaishitong has considerable room for long-term growth.

Accelerate business transformation, and the future of semiconductors is promising. The company continues to promote inventory removal and capital return from the real estate business. At this stage, the real estate project has entered the final stage, and the subsequent growth rate is relatively limited. The semiconductor equipment business is expected to become the core driving force for the company's future growth. The company currently has two equipment holding subsidiaries, Kaishitong and Jiaxin. The products have passed customer verification and acceptance and commercial orders from many domestic fab manufacturers, and the scale of confirmed revenue and profitability are expected to increase rapidly in the future. We expect the company to achieve net profit of 0.18 billion yuan, 0.23 billion yuan, and 0.28 billion yuan respectively in 2024-2025, corresponding to the current price-earnings ratio levels of 52x, 41x, and 34x respectively, maintaining a “buy” rating.

Risk warning

1. The pace of semiconductor equipment verification falls short of expectations;

2. Domestic fab tenders fell short of expectations.