Key points of investment

Demand for ceramic heaters is strong, and 24H1's performance has increased dramatically

The company's main business is R&D, manufacturing, sales and service of advanced ceramic material components and surface treatment services for pan-semiconductor equipment. The main products and services include the three major segments of advanced ceramic parts, surface treatment and metal structural components.

Thanks to the recovery in global semiconductor capital expenditure and rising downstream demand, and strong downstream demand for ceramic heaters, the core component of semiconductor equipment developed and produced by the company, 24H1's performance increased dramatically. 24H1 achieved revenue of 0.385 billion yuan, up 64.27% year on year; net profit to mother 0.139 billion yuan, up 308.89% year on year; net profit after deducting non-return to mother 0.136 billion yuan, up 305.56% year on year; and gross profit margin of 60.91%, up 22.36 percentage points year on year. According to the company's August 2024 investor survey records, advanced ceramic components accounted for about 89% of 24H1's main business revenue, an increase of more than 6 percentage points over the previous year; surface treatment service revenue accounted for about 11%.

Looking at a single quarter, 24Q2 achieved revenue of 0.224 billion yuan, up 85.78% year on year, up 39.29% month on month; net profit of 0.089 billion yuan, up 350.70% year on year, up 75.90% month on month; net profit without return to mother 0.087 billion yuan, up 333.89% year on year, up 76.03% month on month; gross profit margin of 62.81%, up 20.77 percentage points year on year, up 4.56 percentage points month on month.

Customers include well-known semiconductor equipment manufacturers at home and abroad, and are vigorously deploying advanced ceramic material components for high-value-added module products: The company has mastered the entire advanced ceramic process technology from material formulation to component manufacturing. As of August 2024, it has mass-produced 6 types of advanced ceramic materials, and is currently developing 2 new materials, and has designed and developed a total of 0.013 million customized components. The company's advanced ceramics are mainly used in advanced process equipment for wafer manufacturing. Currently, it has entered etching, thin film deposition, ion implantation, lithography and oxidation diffusion equipment. Customers include world-renowned semiconductor equipment manufacturers such as Company A, as well as leading domestic semiconductor equipment companies such as North China Chuang, China Micro, and Tuojing Technology. In addition, the company's advanced ceramic products are also used in batches in other pan-semiconductor devices such as display panels, LEDs, and photovoltaics, as well as in fields such as powder crushing and grading of electronic (including lithium batteries) materials, and fuel cell manufacturing.

In the future, the company will actively expand the coverage of back-end process equipment, and continue to vigorously deploy high-value-added and technologically difficult modular products such as ceramic heaters, electrostatic chucks, and ultra-high purity silicon carbide kits, as well as the development of new materials such as titanium oxide and ultra-high purity silicon carbide. The company's ceramic heater products have been assembled in SACVD, PECVD, LPCVD and laser annealing equipment, etc., covering 6 inch, 8 inch and 12 inch processes, and have different designs for single-zone heating and multi-zone heating. The operating temperature range has reached 400 to 650 ℃. The 8-inch electrostatic chuck mounted on the etching machine has been mass-produced, and the 12-inch electrostatic chuck is currently undergoing customer testing. The fund-raising project “Advanced Materials Production Base Project” is expected to be put into operation in 2025; the project is mainly used for the production of structure-functional modular products such as ceramic heaters and electrostatic chucks, and will greatly increase the production capacity of ceramic heaters and electrostatic chucks after commissioning.

Surface treatment services: The company's surface treatment services focus on the field of display panels, serving world-renowned display panel manufacturers such as BOE, TCL Huaxing Optoelectronics, Youda Optoelectronics, and Tianma Microelectronics. They have received good customer feedback on key indicators such as surface treatment cleanliness and durability, and have won a high market reputation. In the semiconductor field, the company also has production capacity for new product processing and recycling of 14nm process equipment components. The company will continue to promote cooperation with Company A in CVD equipment surface treatment services in the field of display panels and promote expansion to semiconductor surface treatment. After the second phase of the Sichuan production base is completed and put into operation, the surface treatment production capacity of the company's advanced semiconductor equipment components can be greatly increased.

Metal structural parts: The company's metal structural parts products are used in display panel production equipment, including upper electrodes, wall panels, etc. These products comprehensively use various technologies and manufacturing methods such as precision processing, anodizing and spraying.

In addition to the original equipment manufacturer, the company is one of a small number of domestic and local enterprises that produce new high-end electrode products.

Investment advice: In 2024-2026, we expect the company's revenue to be 0.802/1.02/1.22 billion yuan, respectively, with growth rates of 66.9%/27.1%/19.7%, and net profit to mother of 0.28/0.361/0.434 billion yuan, respectively, with growth rates of 242.1%/29.0%/20.2%, respectively; PE 45.7/35.4/29.5, respectively. The company has mastered the full process technology of advanced ceramics from material formulation to component manufacturing. Customers cover well-known semiconductor equipment manufacturers at home and abroad, and vigorously deploy high-value-added and high-tech module products such as ceramic heaters, electrostatic chucks, and ultra-high purity silicon carbide kits, which have significantly benefited from the trend of localization in the semiconductor equipment industry chain, and there is broad room for growth. Covered for the first time, giving a “buy-A” rating.

Risk warning: Downstream terminal market demand falls short of expectations; risk of new technologies, new processes, and products not being industrialized as scheduled; risk of market competition increasing risk; risk of capacity expansion falling short of expectations; risk of dependence on imports of some advanced ceramic powders; systemic risks, etc.