Key investment points: It is proposed to acquire 89.42% of Tegino's shares in cash, making the application field of high-end thermal interface materials more high-end, and continuing to deepen the layout in the field of semiconductor packaging materials.

It is proposed to acquire 89.42% of Tegino's shares in cash. On December 26, 2024, Debon Technology plans to use 257.779 million yuan in cash to acquire a total of 89.42% of the shares held by the original shareholders of Suzhou Tegeno New Material Technology Co., Ltd. If the transaction is completed, Tigino will become the company's controlling subsidiary. Debon Technology said that in order to continue to deepen its layout in the field of semiconductor packaging materials, promote the rapid and high-quality development of the company's semiconductor business, and accelerate the company's business expansion in the field of high computing power, high performance and advanced packaging.

Tigino focuses on the field of high-end thermal interface materials. Tigino's main business is R&D, production and sales of high-end thermal interface materials, and is mainly used in semiconductor integrated circuit packaging. It provides customers with integrated thermal interface material solutions around electronic chip level, system level, board level and device level requirements. The company has developed thermal interface materials with high thermal conductivity, high reliability, high wettability, low thermal resistance, low stress, and low oil permeability, and has successively mass-produced original high-end products such as phase change materials, low freezing point liquid metal paste, multi-structured liquid metal sheets, low stress high thermal conductivity gaskets, etc. The thermal conductivity solutions provided have been used in data centers, consumer electronics, automotive domain control, cold plates, and board-level passive components such as immersion servers, etc., and has obtained heat dissipation from industry-leading chip and server chip design companies Widely recognized by well-known end customers such as manufacturers and switch vendors.

Payments for cash purchases will be made in 3 installments. In 2023, Tigino's 2024Q1-Q3 revenue was 31.3632 million yuan and 41.2136 million yuan, respectively; net profit was -19.4003 million yuan and 11.0329 million yuan, respectively. Among them, in 2023, Tigino paid 23.091 million yuan due to a one-time confirmed share payment, resulting in negative net profit for 2023. Debon Technology's current transfer payment is divided into 3 payments: ①, 30% of the transaction consideration within 10 days after the agreement is signed and effective; ②, 50% of the transaction consideration is paid within 10 working days from the delivery date of this transaction; ③. If compensation obligations are not initiated, 20% of the transaction consideration is paid within 1 month after the performance commitment period expires and the annual audit report is disclosed.

Debon's acquisition will help expand the business sector. Debon Technology focuses on the development and industrialization of high-end electronic packaging materials. Tigino is mainly engaged in R&D, production and sales of high-end thermal interface materials, and is mainly used in semiconductor integrated circuit packaging. This acquisition will help expand the product range of Debon Technology's electronic packaging materials, improve product solutions, expand business areas, accelerate the company's business layout in the field of high computing power, high performance, and advanced packaging, and open up new growth points.

Profit forecasting and valuation recommendations. We expect Debon Technology's 2024E-2026E revenue to be 1.101 billion yuan, 1.448 billion yuan, and 1.808 billion yuan, respectively, and net profit to mother (before deduction) of 0.091 billion yuan, 0.151 billion yuan, and 0.212 billion yuan, respectively. Using the PE valuation method, combined with comparable company levels, Debon Technology was given a 55x valuation of 2025E (PE), corresponding to a reasonable market value of 8.328 billion yuan and a target price of 58.55 yuan/share. For the first time, coverage gave a “superior to the market” rating.

Risk warning: New product introduction is slower than expected, market competition intensifies, core R&D personnel are leaving their jobs, etc.