Incident description

The company released its 2024 three-quarter report. 2024Q1-Q3 revenue was 5.507 billion yuan, +36.27% year over year, net profit attributable to mother 0.913 billion yuan, -21.28% year over year, after deducting non-return net profit of 0.813 billion yuan, +10.88% year over year. Among them, 2024Q3 revenue was 2.059 billion yuan, +35.96% YoY, net profit to mother 0.396 billion yuan, +152.63% YoY, net profit not attributable to mother 0.33 billion yuan, +53.79% YoY.

Incident Reviews

Growth was driven by etching equipment, and gross margin recovery deducted an increase in non-net profit margin. 2024Q1-Q3's etching equipment revenue was 4.413 billion yuan, up 53.77% year on year. Delivery of high-end products with key etching processes in advanced logic and storage increased significantly, and key etching processes in advanced logic devices and ultra-high aspect ratio etching processes for advanced memory devices achieved mass production. Previously, gross margin was affected in 2024Q2 due to adjustments in accounting standards. The 2024Q3 gross profit margin was 43.73%, returning to normal levels. 2024Q3 deducted non-net interest rate of 16.04%, up 1.86pct year on year and 4.08pct month-on-month. Mainly due to increased revenue, the company's overall cost ratio decreased due to the scale-up effect. In addition, 2024Q3's equity investment income including non-recurring profit and loss was 0.081 billion yuan, an increase of 0.183 billion yuan compared to the 2023Q3 loss of 0.102 billion yuan, increasing the company's net profit before deducting non-recurring profit.

Orders continue to rise, production is full, and future performance is supported. In the first three quarters, the company added 7.64 billion yuan in orders, up about 52.0% year on year, of which orders for etching equipment were added at 6.25 billion yuan, up about 54.7% year on year; in the first three quarters, it produced 1,160 cavities of special equipment, up about 310% year on year, corresponding output value was about 9.419 billion yuan, up about 287% year on year, and inventory at the end of 2024Q3 was 7.82 billion yuan, which continued to grow month-on-month. Among them, products were issued about 3.507 billion yuan, a significant increase from the beginning of the year 2.64 billion yuan, contract debt of about 2.988 billion yuan, continued to grow month-on-month. Full orders and production will support the company's future performance growth.

Platform-based expansion continues to advance, and progress is remarkable. The company's current research projects cover six types of equipment and the development of more than 20 new devices. LPCVD achieved sales revenue of 0.028 billion yuan for the first unit, added orders of 0.3 billion yuan, and commenced deployment. The company's EPI equipment has successfully entered the client mass production verification stage, and has completed process verification for many advanced logic device and MTM device customers. MOCVD actively lays out the field of silicon carbide and gallium nitride-based power devices, and has made good progress in developing specialized MOCVD devices for micro-LED and other display fields. Several new MOCVD products that have been delivered and are about to be delivered are entering the market one after another. The company's platform-based expansion continues to advance, and progress is remarkable.

The company is expected to achieve revenue of 8.6, 11.1, and 14.1 billion yuan in 2024-2026, maintaining a “buy” rating.

Risk Alerts

1. Restrictive policies further exacerbate risks;

2. The risk that the recovery in semiconductor manufacturing boom falls short of expectations;

3. The risk that the company's new etching equipment process and new product verification progress falls short of expectations.