Introduction to this report:

The company released the 24Q3 report. The net profit for Q3 reached 0.396 billion yuan, an increase of 152.63% over the previous year. The company signed a full number of new orders. With the subsequent release of new products, I am optimistic about the company's long-term development investment points:

Maintain the increase rating and maintain the target price of 194.3 yuan. The company is a leader in semiconductor etching equipment in China, with high revenue growth in the third quarter. Considering that the company was affected by R&D expenses in the short term, we slightly lowered the company's 2024-2026 EPS performance to 3.15/4.01/5.10 (original value 3.31/4.48/5.88). Referring to the industry valuation of 49.7x PE, considering that the company is a leader in semiconductor etching equipment in China, expanding production of core equipment for advanced manufacturing processes, accounting for 22% of the scale of advanced equipment. The coverage is expected to further increase to 50-60% of the future equipment market, with broad room for growth, giving the company 61.7 times PE in 2024, maintaining a target price of 194.3 yuan, and maintaining an increase rating.

The company's net profit to mother increased in 24Q3, and new orders were plentiful. The company released its report for the third quarter of 2024, and 3Q24 achieved revenue of 2.059 billion yuan, +35.96% year over year and +11.77% month on month. Among them, etching equipment revenue was 17.15 yuan, +49.41% year-on-year, accounting for 83.3% of total revenue. Net profit to mother was 0.396 billion yuan, +152.63% year-on-year, and +48.11% month-on-month. Mainly due to the company's 24Q3 increase in new shipments of high-end products with key etching processes in advanced logic and memory device manufacturing. 3Q24 gross margin increased to 43.7%, +5.5% month-on-month.

Looking at the order side, the company added 7.64 billion yuan of new orders in the first three quarters of 2024, +52.0%, of which the etching equipment added 6.25 billion yuan, +54.7% year-on-year. In addition, the company's new products began to be released, and LPCVD added 0.3 billion yuan in orders. Looking at a single quarter, 3Q24 signed new orders of 2.94 billion yuan, orders for etching equipment were 2.31 billion yuan, and new orders were saturated.

The company is deeply involved in semiconductor etching equipment to ensure long-term growth in the volume of new products released. In 2024, the company continued to increase its R&D efforts. In the first three quarters of 2024, the company spent 0.914 billion yuan on R&D, an increase of 81.92% over the previous year. In addition to maintaining its leading edge in etching equipment, the company continues to expand new products: 1) MOCVD: The company actively lays out the market for silicon carbide and gallium nitride-based power device applications and has made good progress in the development of dedicated MOCVD devices in micro-LED and other display fields; 2) LPCVD: the company's new product in 2024 achieved first sales, with revenue of 0.028 billion yuan, and received a new order of 0.132 billion yuan in the third quarter; 3) EPI: EPI equipment It has successfully entered the client mass production verification stage, completed process verification for many advanced logic devices and MTM device customers, and has been highly recognized by customers.

Catalysts: Downstream customers are actively expanding production; the company continues to release new products Risk warning: market demand falls short of expectations; product verification falls short of expectations