The company announced third-quarter results: revenue of 0.349 billion yuan, +56.79% year over month, +52.70% month on month; net profit to mother 0.016 billion yuan, -51.39% year on year, +115.77% month on month. In the first three quarters, the company achieved revenue of 0.812 billion yuan, +38.21% year over year; net profit to mother -0.052 billion yuan, -165.58% year over year. The company's various series of products meet customer mass production needs and continue to achieve rapid growth in sales revenue through customer verification; benefiting from the increase in the share of front-end equipment, Q3 gross margin increased sharply month-on-month, and net profit to mother turned a loss into a profit. The company successfully developed light and dark field nanographic wafer defect detection equipment and optical key size inspection equipment. The company launched three major software products. The combination of software and hardware enhances customer stickiness, the order scale continues to grow, and the verification of new equipment is progressing smoothly. I am optimistic that the company's performance will continue to grow and maintain purchases.

3Q24 review: New product verification progressed smoothly, and net profit to mother changed the company's 3Q24 revenue of 0.349 billion yuan, an increase of 56.79% and a 52.70% increase in revenue. The main reason for the significant increase in revenue over the same period was that the company's various series of products continued to enter mass production through customer verification, and the order scale continued to grow. 3Q24 achieved a gross profit margin of 49.64%, +2.06pcts year over year and +11.77pcts month-on-month, mainly due to the increase in the share of front-end equipment. 3Q24's R&D expenses were 0.128 billion yuan, an increase of 167.36%, and the R&D cost rate was 36.7%, mainly due to the company further increasing investment in process iterative upgrading of new products and existing products. The sharp increase in gross margin led to a return of 3Q24 net profit to 0.016 billion yuan, -51.39% year-on-year and +115.77% month-on-month. By the end of 2024Q3, the company's inventory and contract liabilities had increased by 0.185/0.061 billion yuan month-on-month to 1.555/0.698 billion yuan, respectively, and the company had sufficient orders in hand.

Outlook: New equipment development is progressing smoothly, and the combination of software and hardware capabilities creates a moat 1) Unpatterned wafer defect detection, three-dimensional morphology measurement, medium and metal film thickness measurement, and overlay accuracy measurement equipment customer orders continue to grow steadily, and the market share continues to increase. Currently, research and development of more advanced models of equipment is progressing smoothly; 2) Brightfield nanographic wafer defect detection equipment, and optical key size measurement equipment have all been shipped to some customer production lines to verify that the process development and application are progressing smoothly Profit; 3) The company is Develop electronic beam key size measurement equipment and continue to expand market space; 4) The company launched three major software products: yield management, automatic defect classification, and lithography analysis. The combination of software and hardware enhances customer stickiness. The company covers fields such as logic, storage, 2.5/3D packaging, etc., and is optimistic about the company's growth under active downstream production expansion.

Valuation: Maintain a “buy” rating, and give the company sufficient on-hand orders with a target price of 93.94 yuan. We maintain the company's 24/25/26 revenue forecast of 1.34/2.37/3.64 billion yuan. However, considering the impact of the new accounting standards on gross margin and the company's high R&D investment, we adjusted the gross margin and R&D cost ratio assumptions, corresponding to the 2024/25/26 net profit margin of 0.031/0.28/0.64 billion yuan (previous value: 0.11/0.38/0.76 billion billion yuan yuan). Maintaining a “purchase” is 7.4 times that of the company's 25-year PS. Considering the company's leading position and growth, a certain premium is given. Based on the 25-year 12.7x PS, the target price is 93.94 yuan (previous value: 81 yuan).

Risk warning: In the global semiconductor downturn cycle, demand for semiconductor equipment falls short of expectations, and industry competition intensifies.