Core ideas
In 2024, the company's revenue increased by 45%, achieving rapid growth, and achieved the first sale of film deposition equipment; net profit to mother fell 10% year-on-year, mainly due to the company's sales discounts, a sharp increase in R&D expenses, and a decrease in equity disposal income. In 2025Q1, the company's revenue increased by 35%, and net profit to mother increased by 26%, which was lower than the revenue growth rate, mainly due to a sharp increase in R&D expenses. The company's inventory and contract liabilities have maintained good growth, which indicates that on-hand orders have maintained a good level. The company actively promotes platform-based layout, the competitiveness of etching equipment continues to increase, various types of thin film deposition equipment are progressing rapidly, and plans to cover a variety of quantitative testing equipment products. The future is worth looking forward to.
occurrences
In 2024, the company achieved operating income of 9.065 billion yuan, a year-on-year increase of 44.73%; net profit to mother was 1.616 billion yuan, a year-on-year decrease of 9.53%.
2025Q1 achieved operating income of 2.173 billion yuan, an increase of 35.40% year on year; net profit to mother was 0.313 billion yuan, up 25.67% year on year.
Brief review
2024: Rapid revenue growth, high R&D expenses affected the revenue side. In 2024, the company achieved revenue of 9.065 billion yuan, a year-on-year increase of 44.73%, of which etching equipment revenue reached 7.277 billion yuan, a year-on-year increase of 54.72%; thin film deposition equipment achieved first sales, with revenue of 0.156 billion yuan in 2024; MOCVD equipment revenue of 0.379 billion yuan, which declined due to the sluggish boom.
On the profit side, net profit to mother in 2024 was 1.616 billion yuan, down 9.53% year on year. In terms of profitability, gross profit margin and net interest rate were 41.06% and 17.81%, respectively, -4.77pct and -10.67pct, respectively. The decline in profit margins was mainly due to (1) structural changes in customers this year, and the company gave certain sales discounts to some customers, which led to a decrease in gross margin this year; in 2024, the company significantly increased R&D efforts. R&D expenses were 1.418 billion yuan, +73.59% year on year ; (3) In 2023, the company sold part of its shares held by Tuojing Technology Co., Ltd., which generated net income after tax of about 0.406 billion yuan. In 2024, the company had no such equity disposal proceeds.
2025Q1: Revenue maintained high growth, maintained a high level of R&D, and maintained a good level of on-hand orders in 2025Q1. The company achieved revenue of 2.173 billion yuan, an increase of 35.40% over the previous year, and continued to maintain rapid growth. Net profit to mother was 0.313 billion yuan, up 25.67% year on year. In terms of profitability, gross profit margin and net interest rate were 41.54% and 14.18%, respectively, -3.40 and -1.31pct year on year. The gross margin was affected by changes in accounting standards. The slight decline in net interest rate was mainly due to an increase of 0.25 billion yuan in R&D expenses in the current period compared to the same period last year, +116.80% year over year.
As of 2025Q1, the company's inventory and contract liabilities were 7.448 and 3.067 billion yuan respectively, up 5.81% and 18.60% compared with the end of 2024, indicating that the company maintained a good level of on-hand orders.
Actively promote platform-based layout, and thin film deposition equipment is progressing rapidly
(1) Etching equipment: New shipments for high-end products with key etching processes in advanced logic and memory device manufacturing have increased significantly, and mass production of key mid-stage etching processes for advanced logic devices and ultra-high depth to width ratio etching processes for advanced memory devices has been achieved; (2) Thin film deposition equipment: Six products have been developed and introduced to the market. Tungsten series thin film deposition products: CVD tungsten equipment, HAR tungsten equipment, and ALD tungsten equipment, can cover all tungsten applications in memory devices. Repeated mass production orders have been obtained from advanced storage customers, and shipped to multiple logic customers for verification. A series of metal grid products used in advanced logic devices have been developed: ALD titanium nitride, ALD titanium aluminum, and ALD tantalum nitride products have completed multiple advanced logic customer equipment verification. On the basis of existing R&D of metal CVD and ALD equipment, the company is simultaneously promoting the development of various products to increase the coverage of film equipment. In addition, EPI equipment has successfully entered the client mass production verification stage to meet the mass production requirements of the customer's germanium-silicon epitaxial growth process in advanced manufacturing processes. (3) Measurement equipment: Through investment and establishment of a subsidiary, the company lays out the quantity testing equipment sector. The subsidiary “Ultra Micro Company” has introduced a number of top international experts and leading talents in the field of electron beam inspection equipment. They all have more than 10 years of experience in electron beam equipment development and product commercialization, and have planned to cover a variety of quantitative testing equipment products.
Investment advice
The company is expected to achieve operating income of 12.089, 15.683, and 20 billion yuan respectively in 2025-2027, up 33.36%, 29.73%, and 27.53% year-on-year, and net profit to mother of 2.273, 3.078, and 4.235 billion yuan respectively, increasing 40.70%, 35.42%, and 37.57% year-on-year respectively. Corresponding PE is 51.60x, 38.11x, and 27.70x respectively, maintaining a “buy” rating.
risk analysis
(1) Downstream production expansion falls short of expectations: The company's business is strongly correlated with the capital expenses of downstream semiconductor Fab customers. If downstream investment and desire to expand production decrease, it will affect the company's product sales.
(2) Increased trade frictions: Increased trade frictions between China and the US may adversely affect the company's preparation of key components.
(3) New product development falls short of expectations: If new product development falls short of expectations, it will have a negative impact on subsequent revenue.
(4) Market competition continues to intensify: The company's competitors are internationally renowned semiconductor equipment manufacturers and emerging domestic semiconductor equipment companies. If the company is unable to effectively cope with the competitive environment in the market, it will face adverse effects such as a decline in its position in the industry.
