Introduction to this report:

Q2 performance is in line with expectations; superior products promote iterative upgrading, continue to promote platform-based layout; improve production capacity layout, and actively promote localization of parts.

Key points of investment:

Maintain an increase in holdings rating: Keep net profit unchanged at 1.007/1.29/1.677 billion yuan in 24-26, and keep EPS unchanged at 4.25/5.45/7.08 yuan in 24-26. Keep the target price of 159.32 yuan unchanged, and maintain an increase in holdings rating. ：

Q2 The results were in line with expectations. The company announced that 24H1 achieved revenue of 1.497 billion yuan/ +21.23%, and net profit of 0.433 billion yuan/ +15.65% to mother. 24Q2 alone achieved revenue of 0.816 billion yuan/ +32.03%, and net profit of 0.231 billion yuan/ +27.89% to mother. In 24H1, the company's revenue from CMP equipment, supporting materials, technical services and cleaning equipment all increased on a large scale. The 24H1 gross profit margin remained relatively stable at 46.29% /-0.03pct. The 24H1 sales/management/R&D expense rates were 6.02%/5.47%/11.42%, respectively, and the year-on-year change was +0.66/+0.38/+0.18pct, respectively. The three cost rate increases are mainly due to the company's many new products in the verification and market development stage.

Superior products promote iterative upgrades and continue to promote platform-based layout. 1) CMP equipment: The company continues to iterate and upgrade and expand its market share. 24H1, the high-performance CMP machine Universal H300 launched by the company, has been shipped in small batches. 2) Thinning equipment:

Versatile-GP300 has obtained batch orders from multiple head front-end fabs; Versatile-GM300 has been sent to domestic head sealing and testing plants for verification. 3) Cutting equipment: The Versatile-DT300, a 12-inch wafer edge cutting device for advanced manufacturing processes and advanced packaging, was launched and has been sent to many customers for verification. 4) Cleaning equipment: The brush cleaning equipment used in 4/6/8 inch compound semiconductors has been tested for the first time. 5) Film thickness measurement equipment: Determine batch repeat orders from leading companies.

Improve the production capacity layout and actively promote the localization of parts. 1) Production capacity layout: The Beijing base and Tianjin base, which were invested in the early stages, are expected to be completed and inspected by the end of 24. At that time, the company's production capacity of CMP equipment, thinning equipment, and cleaning equipment is expected to increase. Furthermore, in order to improve production capacity, the company plans to invest 1.698 billion to build a new base in Lingang, Shanghai. 2) Parts: The company continues to promote the localization of parts. It has completed the localization development of core components such as thin equipment spindles and porous suction cups, and has partially met mass production conditions. In addition, the company established Huahai Qingke (Guangzhou) to build an incubation platform for key components of semiconductor equipment.

Risk warning: semiconductor industry cycle fluctuations, domestic substitution, and company product development falling short of expectations.