Conclusions and Recommendations:

The company released its annual report, with a revenue increase of more than 4% and a net profit increase of 27% in 2024, which is in line with expectations. In the long run, the company has gradually extended from cleaning equipment to gluing, development, and wet etching, and its performance has the potential for sustained and rapid growth. The company's current share price corresponds to 32 times and 27 times PE in 2025-2026, respectively, giving a buy rating.

4Q24 performance reached a new high, and all business lines grew rapidly: Benefiting from the recovery of the global semiconductor industry and the strong market demand in Chinese mainland, the company achieved revenue of 5.62 billion yuan in 2024, with YOY growth of 44.5%; The net profit was 1.15 billion yuan, YOY increased by 26.7%, and EPS was 2.64 yuan. The reasons why the company's net profit was lower than revenue were: the consolidated gross profit margin was 48.9%, down 3.1 percentage points from the same period last year; At the same time, the equity incentive fee was 290 million yuan, an increase of 87% year-on-year, excluding this factor, the company's net profit increased by 35% year-on-year.

In terms of business, the company's semiconductor cleaning equipment revenue in 2024 will be 4.06 billion yuan, a year-on-year increase of about 55%; the revenue of other semiconductor equipment (electroplating, vertical furnace tubes, stress-free copper polishing equipment, etc.) was 1.14 billion yuan, a year-on-year increase of about 21%; The revenue of advanced packaging wet process equipment was 246 million yuan, a year-on-year increase of about 54%. The company's business lines have maintained a rapid growth momentum. In terms of quarters, in the fourth quarter, the company achieved revenue of 1.64 billion yuan, an increase of 44.1% in YOY, and a net profit of 400 million yuan, an increase of 66% in YOY. Single-quarter revenue and profit hit record highs. As of 2024, the contract liability will be 1.1 billion yuan, an increase of 21% from the end of 3Q24, indicating that the demand for domestic equipment will continue to maintain a strong momentum at the end of the previous year.

Independent demand for semiconductor equipment continues to escalate: In the context of multiple rounds of suppression of China's high-tech industry by the United States, China's demand for advanced semiconductor manufacturing processes has become more urgent. Chinese companies represented by Huawei and YMTC are striving to break through the limitations of semiconductor manufacturing processes, among which the support of equipment manufacturers is particularly crucial, and local equipment manufacturers will also gain greater market space.

Profit forecast: Looking forward to the future, in addition to deep cultivation of cleaning equipment, the company actively expands its product portfolio in the field of semiconductor equipment, and has successively launched electroplating equipment, copper polishing equipment, advanced packaging wet equipment, vertical furnace equipment, etc. In addition, it is also actively deployed in the field of core equipment such as front-end gluing and developing track equipment and PECVD to build a new growth point for subsequent performance growth. We expect the company to achieve net profit of 1.53 billion yuan and 1.76 billion yuan in 2025 and 2026, YOY growth of 33% and 15% respectively, EPS of 3.51 yuan and 4.04 yuan respectively, and the current stock price corresponds to 32 times and 27 times PE in 2024-26 respectively, with a relatively low valuation and a buy rating.

Risk warning: technology disputes have dragged down the growth of demand for semiconductor equipment.