Introduction to this report:

The company released a semi-annual performance report. The company's products have blossomed a lot, and due to active downstream production expansion, the company's product introduction is smooth, orders are growing rapidly, and the company can be expected to develop for a long time.

Key points of investment:

The increase rating was maintained, and the target price was lowered to 93.5 yuan. With the recovery in downstream demand and active expansion of production by fabs, the company's orders increased. Affected by the failure to fully recover in 24Q1 and the increase in share capital, we lowered the company's 2024-2026 EPS performance to 1.70/2.55/ 3.78 yuan (previous value was 2.52/3.76/5.23 yuan). Referring to its counterpart, which is 38.57 times PE in 2024, considering that the company is the only domestic manufacturer that can provide mid-range and high-end mass-produced gluing and imaging equipment, and that equipment such as front-end gluing, chemical cleaning, and temporary bonding/unbonding was successfully verified and urgently needed to be released, giving the company a valuation level of 55 times PE in 2024, lowering the target price to 93.50 yuan, and maintaining an increase in holdings rating.

The company's 24H1 orders surged, and the second quarter's performance grew rapidly. The company released the 2024H1 performance report, with 1H24 revenue of 0.694 billion yuan, -0.29%; the company's orders grew rapidly, with 24H1 signing new orders of 1.219 billion yuan, an increase of about 30% over the previous year. Among them, new temporary bonding/unbonding orders increased more than 10 times over the same period last year. By the end of June 2024, the company had more than 2.6 billion on-hand orders, a record high. 24H1 achieved net profit of 0.076 billion yuan to mother, or -43.88% YoY. The year-on-year decline in the company's net profit is mainly due to: 1) The company continued to increase investment in R&D, and R&D expenses increased dramatically, reaching 0.117 billion yuan, a year-on-year increase of 52.00%, accounting for 15.93% of revenue. 2) The iteration and development of various new products are progressing smoothly, but large-scale sales have not yet been formed. Looking at a single quarter, the company achieved revenue of 0.449 billion yuan in 2Q24, up 84.03% month-on-month and 10.31% year-on-year; net profit to mother was 0.06 billion yuan, -13.72% year-on-year, and +275.88% month-on-month.

Frontier equipment customers have successfully verified, and advanced package release can be expected. The company's pioneering equipment continues to break through. The new FTEX gluing and imaging equipment can meet the production capacity increase needs of more advanced lithographers in the future. The KS-CM300 high-temperature SPM machine, an ultra-demanding chemical cleaning machine, has been shipped to the client for verification. The company has a forward-looking layout of advanced packaging equipment. The company includes equipment such as TSV wet cleaning, bumping gluing, and temporary bonding/unbonding. According to industry chain research, the value accounts for 10% to 15% of advanced packaging production lines. The company's temporary bonding/unbonding machines are at the forefront of the industry and have reached in-depth cooperation with many domestic 2.5D and HBM customers. Currently, more than 10 units have been mass-produced or verified, and it is expected to usher in rapid volume.

Catalysts: Active expansion of downstream production; acceleration of company orders

Risk warning: The recovery in semiconductor boom falls short of expectations; product verification falls short of expectations.