Core views

The company's product range is becoming richer, customer recognition is gradually increasing, and revenue grew steadily in the first half of the year. However, changes in accounting standards combined with changes in product structure led to a marked decline in gross margin. At the same time, due to a combination of factors such as a sharp increase in R&D investment and an increase in share payment expenses, the company's performance declined sharply. Currently, six major series of devices, including those without graphics and those with graphics, have been mass-produced and applied by leading domestic customers. I am optimistic about the future progress of the company's light-dark field and OCD device client verification and deployment.

occurrences

2024H1 achieved operating income of 0.464 billion yuan, a year-on-year increase of 26.91%; net profit to mother -0.068 billion yuan, a year-on-year decrease of 248.05%; net profit after deducting non-return to mother -0.115 billion yuan, a year-on-year decrease of 4992.21%.

Looking at a single quarter, 2024Q2 achieved operating income of 0.228 billion yuan, a year-on-year increase of 12.07%; net profit to mother -0.102 billion yuan, a year-on-year decrease of 801.72%; net profit after deducting non-return to mother -0.123 billion yuan, a year-on-year decrease of 4009.61%.

Brief review

Revenue grew steadily, and high R&D expenses led to a large decline in performance. The company's product range was becoming richer and customer recognition gradually increased, and revenue grew steadily in the first half of the year. 2024H1 achieved revenue of 0.464 billion yuan, an increase of 26.91% over the previous year. It mainly benefited from factors such as continuous breakthroughs in the company's core technology and increasing variety of products, as well as the rapid development of domestic replacement demand and the steady increase in the company's market recognition, and continued growth in the company's customer base and customer orders.

In terms of profitability, 2024H1 achieved a gross profit margin of 46.23%, a year-on-year decrease of 5.02pct. The gross margin dropped significantly, mainly due to ① changes in accounting standards to adjust estimated liabilities to costs; ② changes in customer structure, and the current increase in the share of advanced packaging customers with low gross margins. On the cost side, the 2024H1 company's cost rate for the period reached 66.12%, +18.39pct year on year. Among them, sales, management, R&D, and finance expenses were 8.81%, 13.70%, 44.66%, and -1.06%, respectively, and -1.89pct, +2.22pct, +18.20pct, and -0.14pct, year-on-year, respectively. 2024H1 further increased R&D investment in new products and iterative upgrades of existing products to more cutting-edge processes. R&D expenses reached 0.207 billion yuan, an increase of 114.22% over the previous year.

When it comes down to the profit side, 2024H1's net profit to mother was 0.068 billion yuan, down 248.05% year on year; net profit without return to mother was 0.115 billion yuan, down 4992.21% year on year. The company's performance declined sharply due to a combination of factors such as a sharp increase in R&D investment and an increase in share payment fees.

Contract liabilities and inventory increased significantly, and subsequent performance grew strongly, supported by orders. At the end of 2024H1, the company's contract debt reached 0.628 billion yuan, up 12.23% year on year, up 42.59% from the end of 2023; at the end of 2024H1, the company's inventory reached 1.37 billion yuan, up 37.46% year on year, up 23.19% year on year.

Six series of equipment have been mass-produced and applied by leading domestic customers. Light and dark field and key optical size measurement equipment have entered the customer production line development and verification stage. The company continues to increase the scale of R&D investment in rapid iterative upgrading of various types of products and new product development, and has achieved positive results in the industrialization process of various series of products.

Six types of equipment have been mass-produced and applied by leading domestic customers. The market share of various series of products has been steadily and rapidly growing; the key promotion direction of 2024 is bright and dark field and key optical size measurement equipment; the key promotion direction in 2024 has entered the customer production line development and verification stage.

① Non-graphic wafer defect detection equipment, graphic wafer defect detection equipment, dielectric film film thickness measurement equipment, metal film thickness measurement equipment: Widely used in production lines of major domestic integrated circuit manufacturers. The development of equipment with higher sensitivity and more advanced models is progressing smoothly, preparing for mass production of the customer's next generation process.

② 3D morphology measurement equipment: It is widely used in domestic integrated circuit frontier and advanced packaging customers, and accounts for most of the market share among leading domestic customers in the field of wafer-level advanced packaging. It can also meet the technical requirements of emerging advanced packaging fields such as 2.5D and 3D packaging used in HBM, and effectively solve the full range of quality control requirements such as gluing, lithography, film, electroplating, and etching of RDL small line widths and TSV processes.

③ Overlay accuracy measuring equipment: Mass sales have been achieved, and the number of orders is growing rapidly. The development of more sensitive and advanced models of equipment is progressing smoothly.

④ Brightfield nanographic wafer defect detection equipment, dark field nanographic wafer defect detection equipment series, optical key size measurement equipment: We have completed the development of equipment prototypes, are actively carrying out sample verification tests for many mainstream domestic customers, and are shipping them to some customer production lines for process development and application verification work. Currently progressing smoothly.

⑤ Yield management system and automatic defect classification system: It has been used by many well-known domestic customers, including leading integrated circuit pioneers and advanced packaging customers.

Investment advice

The company's 2024-2026 revenue is expected to be 1.312, 1.862, and 2.538 billion yuan, respectively, up 47.24%, 41.95%, and 36.30% year-on-year, and 2024-2026 net profit to mother is 0.113, 0.218, and 0.364 billion yuan, respectively, up -19.68%, 93.44%, and 67.00% year-on-year respectively. Corresponding to 2024-2026 PE valuations are 134.81x, 69.69x, 41.73x, giving it a “buy” rating.

Risk analysis

(1) Core competitiveness risk: If the company's technology research and development direction does not meet market demand, or the company's development progress in key technologies and key products lags behind competitors in the industry, or the new products developed by the company do not meet customer requirements, it may adversely affect the company's business performance.

(2) Operating risk: The semiconductor equipment industry is greatly affected by fluctuations in downstream market demand. If macroeconomic fluctuations occur drastically in the future, downstream customer demand for equipment will decline or slow down. Furthermore, if the company falls short of expectations in developing new markets and fields, it will also have a significant adverse impact on the company's performance. Under the combined effects of the above influencing factors, the risk of future fluctuations in the company's business performance is not ruled out.

(3) Risk of changes in government subsidies and preferential tax policies: The company undertook a number of national, provincial and municipal scientific research projects and received a certain amount of government subsidies. If the policy support of relevant government departments for the company's industry weakens in the future or there are adverse changes in other industrial policies, the amount of government subsidies received by the company may be reduced, which in turn will have a certain impact on the company's business performance. The company is a high-tech enterprise and can enjoy the preferential rate of high-tech enterprise income tax according to law. In the future, if the preferential tax policies of national or local governments are adjusted unpredictably, or if the company cannot continue to be certified as a high-tech enterprise, the company's profit level will risk declining.