Investment Highlights

Benefiting from the strong demand for semiconductor equipment, the company's revenue grew steadily: in 2024, the company will achieve revenue of 5.618 billion yuan, a year-on-year increase of +44.5%, of which the revenue of cleaning equipment will be 4.057 billion yuan, a year-on-year increase of +55.2%, accounting for 72.2%; the revenue of other semiconductor equipment (electroplating, furnace tubes and other equipment) was 1.137 billion yuan, a year-on-year increase of +21.0%, accounting for 20.2%; The revenue of advanced packaging wet process equipment was 246 million yuan, a year-on-year increase of +53.6%, accounting for 4.4%. The revenue growth was mainly due to the company's continued strong demand for equipment in China's semiconductor industry, and its remarkable achievements in new customer expansion and new market development. During the period, the company achieved a net profit attributable to the parent company of 1.153 billion yuan, a year-on-year increase of +26.7%; The net profit after deduction was 1.109 billion yuan, a year-on-year increase of +26.7%.

Q4 single-quarter revenue was 1.641 billion yuan, +44.1% year-on-year and +4.3% month-on-month; The net profit attributable to the parent company was 395 million yuan, +66.0% year-on-year and +25.4% month-on-month.

The company's profitability was relatively stable, and the expense ratio decreased slightly during the period: the gross profit margin in 2024 was 48.9%, -3.1 pct year-on-year, of which the cleaning equipment was 46.2%, -1.1 pct year-on-year, and other semiconductor equipment was 59.2%, +1.2 pct year-on-year; Advanced packaging wet equipment was 28.8%, -12.0pct year-on-year. During the period, the net profit margin of sales was 20.5%, -2.9 pct year-on-year, the expense ratio for the period was 25.3%, -3.4 pct year-on-year, of which the sales expense ratio was 7.5%, -0.9 pct year-on-year, the administrative expense rate was 5.3%, +0.2 pct year-on-year, the R&D expense ratio was 13.0%, -2.8 pct year-on-year, and the financial expense ratio was -0.5%, +0.2 pct year-on-year. Q4 Gross profit margin was 49.8%, +0.7pct/+4.7pct year-on-year; Net profit margin was 24.1%, +3.2pct/+4.0pct sequentially.

Inventory & Contract Liabilities Increased, and Cash Flow Collection Improved Significantly: As of the end of 2024Q4, the company's contract liabilities were 1.106 billion yuan, +26.2% year-on-year; Inventories were RMB4.232 billion, +7.8% year-on-year. Q4 The company's operating cash flow was 649 million yuan, a significant year-on-year positive, mainly due to the increase in the company's sales collection compared with the previous period and the increase in advance receipts in the current period due to the increase in sales orders.

The company adheres to the strategic policy of "technology differentiation" and "product platformization", and has successfully deployed a variety of equipment such as cleaning, electroplating, gluing and developing, vertical furnace tubes, PECVD, and compound semiconductor etching. (1) Cleaning equipment: In 2023, the company's domestic market share will be about 23%, and its SAPS, TEBO megasound cleaning technology and Tahoe high-temperature sulfuric acid cleaning technology have reached the international leading level. (2) Electroplating equipment: The company has successfully realized the mass sales of electroplating equipment, and its three-dimensional stacking electroplating equipment can handle 3D TSV and 2.5D Interposer high aspect ratio copper plating; The front-end Damascus copper interconnect plating equipment is suitable for the processes required for FinFET, DRAM and 3D NAND of 3D structures; The back-end plating equipment can meet the copper, nickel, tin, silver, gold and other plating processes in Pillar Bump, RDL, HD Fan-Out and TSV. (3) Vertical furnace equipment: LPCVD has passed the verification and mass production of many FABs, and ALD has entered the client verification one after another. (4) Gluing and developing equipment: The company's Ultra Lith gluing and developing equipment supports a variety of lithography processes including i-line, KrF and ArF systems, and is currently being validated at the customer. (5) PECVD equipment: TEOS and SiN processes have been verified on the client. (6) Stress-free CMP and etching equipment are expected to be introduced into the client for verification one after another.

Profit forecast and investment rating: The company's main business continues to grow + product categories continue to expand, we basically maintain the net profit attributable to the parent company in 2025-2026 is 1.55/1.87 billion yuan, and the net profit attributable to the parent company in 2027 is expected to be 2.07 billion yuan, and the corresponding dynamic PE of the current stock price is 32/27/24 times respectively, maintaining the "overweight" rating.

Risk warning: downstream expansion is less than expected, and R&D progress is less than expected.