Core Conclusions

The company released its report for the third quarter of 2024: The company achieved operating income of 1.312 billion yuan (+46.10% YoY) in the first three quarters of 2024, achieved net profit of 0.393 billion yuan (+24.46% YoY), realized net profit after deduction of 0.383 billion yuan (YoY +58.64%), and the consolidated gross margin for the first three quarters was 58.56%.

Looking at a single quarter, the company achieved revenue of 0.515 billion yuan (+59.29% YoY, +22.95%), net profit to mother of 0.159 billion yuan (+97.20% YoY, +23% month-on-month), and realized net profit of 0.149 billion yuan (+83.60% YoY, +15.09% month-on-month) in the third quarter. The gross margin for the single quarter was 59.86% (+2.81pct month-on-month).

The company benefits from the expansion of product categories, the increase in client share, and the continuation of downstream utilization rates/expansion of production. The company currently has a complete product coverage. Currently, the CMP polishing liquid share ranks first among domestic companies. At the same time, it continues to expand to functional wet electronic chemicals, and the category expansion continues. Judging from the client share, the company has now introduced mainstream fabs. In the field of advanced manufacturing processes, the company continues to make efforts to closely follow the customer's volume increase rhythm, and the introduction and loading of various products is progressing smoothly. Judging from the downstream fab situation, as demand for downstream applications such as AI is currently picking up, the operating rate of mainstream wafers is picking up quarter by quarter. At the same time, judging from the progress of production expansion, subsequent expansion of logic and storage plants continues, and overall demand for semiconductor materials is increasing.

Expand into the field of wet electronic chemicals and build a semiconductor material platform company. Semiconductor wet electronic chemicals have the characteristics of many materials, small scale, and scattered markets. Among them, functional chemicals such as etching solutions, cleaning solutions, and developer solutions have similar process difficulties and preparation processes. With years of deep understanding of material formulations, the company is expected to continue to expand into the fields of etching solutions, cleaning solutions, developer solutions, etc., and become the leading platform for high-end wet electronic chemical materials in China, which is expected to open a second growth curve.

Profit forecast: As the company's third-quarter results exceeded expectations and platform dividends continued to be reflected, we raised our profit forecast. The company's revenue for 24-26 is estimated to be 1.841, 2.439, and 3.135 billion yuan, respectively, and the estimated net profit to mother is 0.55, 0.723, and 0.898 billion yuan, respectively. The corresponding EPS is 4.26, 5.59, and 6.95 yuan, respectively, and the corresponding PE is 33.1, 25.2, and 20.3 times, respectively, maintaining a “buy” rating.

Risk warning: Industry competition increases risks, new product development falls short of anticipated risks, and industry prosperity falls short of expected risks.