Incident Overview

The company released its 2024 mid-year report.

CMP and other equipment accelerated revenue confirmation. Q2 revenue grew rapidly year on year 2024H1. The company achieved revenue of 1.497 billion yuan, +21.23% year over year, of which Q2 was 0.816 billion yuan, +32.03% year over year. The increase was significant in a single quarter, in line with previous forecast guidelines. We judge that it mainly benefited from the accelerated revenue recognition of CMP equipment. At the same time, revenue from supporting materials, wafer regeneration, technical services, and wet process equipment all increased relatively well over the same period last year. On July 15, 2024, the company announced the launch of the 500th 12-inch CMP. Currently, the company's contract debt amount is 2.187 billion yuan, and there are still large deliveries of unconfirmed CMP and other equipment, such as thinning, which will support a high short-term increase in performance. At the same time, as the number of CMP equipment holdings continues to rise, key consumables are connected to the maintenance service logic. In terms of new orders, benefiting from storage customers' demand to expand production, we expect 2024H1 new orders to grow significantly, laying the foundation for subsequent performance.

Stock payments affected the expense ratio during the period. The 24H1 profit level decreased slightly. 2024H1 achieved net profit to mother of 0.433/0.368 billion yuan, +15.65%/19.77% year over year, of which Q2 net profit/net profit not deducted to mother was 0.231/0.197 billion yuan, +27.89%/40.01% year over year, also in line with previous guidelines.

The net interest rate and net interest rate of the 2024H1 company were 28.91% and 24.61%, respectively, -1.4 and -0.03pct, respectively. There was a certain decline in profit levels: ① On the gross profit side, 24H1 company's overall gross profit margin was 46.26%, -0.03pct year on year, and the performance was stable; ② on the cost side, the 24H1 company's period expense ratio was 21.64%, +1.16pct. Sales/management/R&D/finance expense ratios were +0.66/+0.18/-0.05pct, respectively. Mainly affected by share payment fees, the increase in the fee rate during the period was the main factor in the decline in 24H1's profit level.

Based on CMP equipment, we continuously improve the product line and invest in the Shanghai integrated circuit equipment base to help the platform-based layout company continue to enrich the product line layout, platformize and achieve positive results while consolidating CMP's competitive advantage. 1) Thinning equipment: The 12-inch ultra-precision wafer thinner Versatile-GP300 has received batch orders from leading companies in many fields, and the all-in-one wafer thinning and laminating machine Versatile-GM300 has been sent to leading domestic sealing and testing companies for verification. 2) Cutting equipment: 12 inch wafer edge cutting equipment has been sent to multiple customers for verification. 3) Cleaning equipment: Used in batches for the company's wafer recycling production. Brush cleaning equipment applied to 4/6/8 inch compound semiconductors has passed client acceptance; small batch orders have been obtained for 4/6/8/12 inch chip box cleaning equipment. 4) Film thickness measurement equipment: Thin thickness measurement equipment used in metal processes such as Cu, Al, W, and Co has been shipped in small batches, and repeated batch orders have been obtained from a leading integrated circuit manufacturing company. 5) Ion implantation: The company shares in Xinyu Semiconductor with 18% shares to lay out the ion implantation equipment process. In addition, the company announced that it plans to invest in the construction of an integrated circuit equipment R&D and manufacturing base in Shanghai, with an investment amount of no more than 1.698 billion yuan. The project is to expand the production capacity of the company's core products and carry out innovative development and upgrades of new products or functions to further help the company's platform-based layout.

Investment advice

We maintain our 2024-2026 revenue forecasts of 35.00, 47.40, and 6.034 billion yuan, respectively, and slightly increase 2024-2026 net profit to mother of 10.09 billion yuan, 13.35 billion yuan, and 1,701 billion yuan (original value of 10.09, 13.33 billion yuan, and 1,699 billion yuan), respectively, +39%, +32%, and +27% year-on-year, and slightly increase the 2024-2026 EPS to 4.26, 5.64 and 7.19 yuan (original value) $4.26, 5.63, and $7.17). 2024/8/16 The stock price of 136.14 yuan corresponds to a PE of 32, 24, 19 times, and maintains an “overstock” rating.

Risk warning

Downstream production expansion falls short of expectations, semiconductor business expansion falls short of expectations. The company's plan to invest in the construction of an integrated circuit equipment R&D and manufacturing base in Shanghai has not yet been completed, and there are uncertainties, etc.