matters:

1) the company realized revenue of 2.508 billion yuan (yoy +52.11%), gross profit margin of 46.02 (yoy-1.7pct), net profit of 0.724 billion yuan (yoy +44.29%) and net profit of 0.608 billion yuan (yoy +60.05%) after deducting non-profit.

2) company 24Q1 realized operating income of 0.68 billion yuan (yoy +10.40%,qoq +1.88%), gross profit margin of 47.92 (yoy +1.26pct,qoq +3.12pct), net profit of 0.202 billion yuan (yoy +4.27%,qoq +26.49%), net profit of 0.172 billion yuan (yoy +2.78%,qoq +15.36%).

comments:

revenue growth, profitability continued to optimize. Revenue for the whole of 23 years was 2.508 billion yuan, up 52.11 percent year-on-year, of which CMP equipment revenue was 2.278 billion yuan (yoy plus 59.20 percent) and other business revenue such as wafer regeneration, key consumables and maintenance services was 0.23 billion yuan (yoy plus 5.55 percent). 24Q1 achieved revenue of 0.68 billion yuan, up 10.40/1.88 YoY/YoY. The sustained and steady growth of revenue is mainly due to:(1) CMP products of the company, as one of the key process equipment for IC front-line manufacturing, have achieved a good market reputation with advanced product performance, quality and after-sales service, and the market share continues to break through;(2) the company's wafer recycling business has obtained batch orders from many large production lines and long-term stable supply. At the same time, with the continuous expansion of the market ownership of CMP products, key supplies and maintenance services and other business scale gradually released. In 2023, non-net profit was $0.608 billion, up 60.05 YoY, while 24Q1 achieved non-net profit of $0.172 billion, up 2.78/15.36 YoY. In 2023, the company's cost-end management was excellent, and the three-fee rate decreased year-on-year, research and development and construction expenditure increased, investment and construction of sales channels and CMP project production supporting projects, helping the company's long-term production capacity and market share increase.

domestic CMP field leader, plus code advanced packaging track to open up growth space. The company's CMP product line covers 6/8/12-inch wafer integrated circuits, advanced packaging, large silicon wafers, third-generation semiconductors, MEMS, MicroLED and other manufacturing processes, the market share has steadily increased. High-end semiconductor equipment has successfully entered SMIC, Changjiang Storage, Huahong Group, Changxin Storage, Shenghe Jingwei, Changdian Technology and other well-known chip manufacturing enterprises, in the domestic market in a leading position. High-performance chip manufacturing through chip stacking has become an important development direction of semiconductor technology under Moore's Law. Advanced packaging technologies such as shrinking chip line width and 3D chip structure continue to evolve. The Chiplet of multiple module chips and underlying basic chip packages through internal interconnection technology and advanced packaging technologies and processes such as DRAM Die vertically stacked high bandwidth memory (HBM) based on 2.5D/3D packaging technology have become important directions for future development. The company's main products CMP equipment, thinning equipment are chip stacking technology, advanced packaging technology key core equipment, will be more widely used, but also the company's future long-term high-speed development of important opportunities.

product iteration expansion continues to advance, product force upward breakthrough. As of the 23rd annual report, the company has made the following progress in various new businesses: 1)CMP equipment: high-performance Universal H300 machine is expected to be mass produced in 2024; Some models have completed the adjustment of limit size compression design and added new functions. Compatible with 6-8 inch material Universal-150Smart machines have been shipped in small quantities. In the research and development of the third generation of new semiconductor models, it is expected to be sent to customers for verification in 2024.2) Thinning equipment: Versatile-GP300 thinning polishing machine to complete customer verification; iterative Versatile-GP300 production machine to achieve 12-inch wafer grinding TTV 0.8 μm, reaching the international advanced level, 12-inch wafer thinning film machine has obtained the integrated circuit packaging test leader Demo order. 3) Cutting equipment: 12-inch wafer edge cutting equipment in 24H1 for a storage leader manufacturer verification. 4) Cleaning equipment: the core technology related to ultra-clean cleaning of nanoparticles has reached the leading level in China; The first 12-inch single-chip terminal cleaning machine HSC-F3400 machine and 4/6/8-inch compound semiconductor brush cleaning equipment were verified by the client. 4/6/8/12 inch sheet box cleaning equipment delivered to wafer reproduction line for verification. 5) Liquid supply system: SDS/CDS liquid supply system equipment for the supply of chemicals such as grinding liquid and cleaning liquid in wet process equipment has been purchased in bulk and has been applied to domestic integrated circuit customers such as logic, advanced packaging and MEMS. 6) Film thickness measurement equipment: The film thickness measurement equipment applied to Cu, Al, W, Co and other metal processes has been shipped in small quantities, and some machines have passed customer acceptance. 7) Wafer regeneration business: wafer regeneration capacity has reached 100000 pieces/month, in the domestic well-known large factories have completed the preliminary import work, obtained a number of large production line batch orders and long-term stable supply. 8) Key consumables and maintenance services: The performance of 12/8/6 inch CMP multi-zone polishing heads continues to improve, and the diversified development and verification of key consumables such as polishing heads are progressing smoothly in customers' large-scale production lines.

investment advice: we expect the company's revenue to be 36.3/46.9/5.53 billion in 2024-2026, the net profit attributable to the parent company to be 10.1/13.1/1.56 billion, and the corresponding EPS to be 6.33/8.23/9.83 yuan. Reference to comparable company valuation, give 2024 35 times PE, corresponding to the target price of 221.7 yuan, maintain a "strong push" rating.

Risk Warning: Sino-US trade friction intensifies; upstream parts supply shortage; downstream customers expand production less than expected