The company's 2024Q2 performance increased significantly year-on-year, maintaining the “buy” rating company's 2024 semi-annual performance forecast. The company achieved operating income of 14.5 to 1.52 billion yuan, YoY +17.46% to +23.13%; realized net profit to mother 4.25-0.445 billion yuan, YoY +13.61% ~ +18.95%; deducted non-net profit of 0.36-0.38 billion yuan, YoY +17.09% ~ +23.59%. Among them, the 2024Q2 company achieved revenue of 7.7 to 0.84 billion yuan, YoY +24.5% ~ 35.82%, QoQ +13.16% ~ +23.45%; realized net profit to mother of 2.23 to 0.243 billion yuan, YoY +23.64% ~ +34.74%, QoQ +10.23% ~ +20.12%; after deducting non-net profit of 1.88~0.208 billion yuan, YoY +34.13% ~ +48.38%, QoQ +9.62 %~ +21.26% As the semiconductor industry cycle gradually picks up, the company, as a domestic CMP leader, will fully benefit from the accelerated penetration of equipment localization. We maintain the company's profit forecast for 2024-2026. We expect net profit to be 1.008/1.312/1.705 billion yuan for 2024/2025/2026, and the EPS for 2024/2025/2026 is 4.26/5.54/7.20 yuan. The current stock price corresponding to PE is 32.3/24.8/19.1, maintaining the “buy” evaluation grade.

2024H1 continues to increase investment in R&D, and the sales scale of CMP and other businesses all achieved year-on-year growth 2024H1. The main reason why the company's performance continues to grow is that the company continues to increase R&D investment and production capacity building, the company's core competitiveness continues to improve, and the sales scale of special equipment, wafer recycling and consumables services such as CMP all increased to varying degrees compared to the first half of 2023.

Achieving the delivery of 500 12-inch CMP equipment and building long-term growth with a platform-based strategic layout, the company issued an announcement on July 14, 2024. It recently completed the launch of the 500th 12-inch CMP equipment and delivered it to an advanced domestic integrated circuit manufacturer, indicating that the quality and reliability of the company's products has been highly recognized by customers, which will help further increase its market share. Furthermore, the company has basically covered large domestic 12-inch integrated circuit production lines. At the same time, as the company's CMP equipment holdings continue to rise, business volume such as key consumables and maintenance services is expected to increase accordingly. Looking ahead to 2024, the company will promote technological progress and industrial upgrading, continue to promote the “equipment+service” platform-based strategic layout, and vigorously explore new opportunities in the field of integrated circuits such as CMP equipment, thinning equipment, and cutting equipment. With its core technical advantages in the CMP field and the accelerated release of various new types of equipment products, the company is expected to fully benefit from the expansion cycle of domestic downstream fabs.

Risk warning: risk of declining industry demand; risk of falling capital expenditure for fabs; technology research and development falling short of expectations.