A few days ago, Weir shares (603501. SH) disclosed its performance forecast for the first three quarters of 2024, and the company's attributable net profit was 2.267 billion yuan to 2.467 billion yuan, an increase of 515.35% to 569.64% year-on-year; The net profit after deduction was 2.2 billion yuan to 2.4 billion yuan, an increase of 1595.8% to 1749.81% year-on-year.

However, the secondary market does not seem to buy this forecast, and the share price of Weir shares fell in the two trading days after the announcement. In response to the performance change, the "China Times" reporter sent a letter to Weir shares, but has not received any reply so far.

"From a macro point of view, the sharp increase in the performance of Weir shares is also a microcosm of the overall recovery trend of the semiconductor industry." Guo Tao, an angel investor and senior artificial intelligence expert, told the China Times that with the gradual recovery of the global economy and the continuous progress of technology, the market demand of the semiconductor industry is gradually recovering, injecting new vitality into the further development of the industry.

Profitability rebounds

According to the announcement, in the first three quarters of 2024, Weir shares are expected to achieve operating income of 18.741 billion yuan to 18.991 billion yuan, an increase of 3.66 billion yuan to 3.91 billion yuan compared with the same period last year, an increase of 24.27% to 25.93% year-on-year.

In the first half of this year, Weir shares also delivered a very bright report card, attracting a lot of attention from the market. According to the semi-annual report, Weir shares achieved operating income of about 12.091 billion yuan in the first half of this year, a year-on-year increase of 36.5%; the corresponding attributable net profit was about 1.367 billion yuan, a year-on-year increase of 792.79%; The non-net profit was 1.372 billion yuan, a year-on-year increase of 1837.73%.

Based on this calculation, Weir shares achieved a net profit of about 900 million yuan to 1.1 billion yuan in the third quarter, a significant increase compared with the same period last year, but still failed to reach the performance peak of 1.275 billion yuan set in 2021. In the past two years, affected by the semiconductor industry cycle, the performance of Weir shares has shrunk sharply, and the company's attributable net profit has declined sharply for two consecutive years.

In response to the growth of performance in the first three quarters of this year, Weir shares said in the announcement that during the reporting period, market demand continued to recover, downstream customer demand increased, with the company's product introduction in the high-end smartphone market and the continuous penetration of autonomous driving applications in the automotive market, the company's operating income and gross profit margin achieved significant growth; In addition, in order to better cope with the impact of industrial fluctuations, the company actively promoted the optimization of product structure and supply chain structure, and the gross profit margin of products gradually recovered, and the overall performance was significantly improved.

"The surge in the performance of Weir shares is a concrete example of the overall recovery of the semiconductor industry." Zhi Peiyuan, a master's student at the School of Management of China University of Mining and Technology (Beijing), told the China Times that behind the recovery of the semiconductor industry is the recovery of downstream demand driven by the global economic recovery, as well as the combined effect of the industry's own cyclical fluctuations. On the one hand, in the post-epidemic era, the global economies have gradually lifted the lockdown, and the demand for consumer electronics, automotive electronics, industrial automation and other fields has rebounded rapidly, driving the sales growth of semiconductor components; On the other hand, the inherent cyclical characteristics of the semiconductor industry determine that after a downturn in the early stage, the market will naturally usher in a recovery cycle.

"The growth of Weir's performance reflects the improvement of the company's market share in the field of mobile phones and automobiles and the further enhancement of profitability under the rebound of the industry." Qunyi Securities Research Report pointed out that since the release of the OV50 series products, Weir has successfully won the share of domestic terminal flagship models such as Xiaomi, Huawei, Vivo, and Honor with its ultra-high-speed focusing ability and high dynamic range. With the acceleration of the company's R&D pace, the competitiveness of the company's products will be further enhanced.

The semiconductor industry is recovering strongly

The substantial growth of Weir's performance is inseparable from the recovery of the semiconductor industry cycle. In addition to Weir shares, Telink Micro (688591. SH), Haiguang Information (688041. SH), Torch Core Technology (688049. SH) and others have also announced the expected increase in performance for the first three quarters of 2024.

Wind data shows that in the first half of 2024, more than 130 semiconductor companies in Shanghai will achieve a total operating income of 211.2 billion yuan, a year-on-year increase of 18.7%, more than 70% of the company's operating income has achieved positive growth, and more than 50% of the company's net profit has improved compared with the same period last year.

Various data show that the global semiconductor industry is in the process of active recovery. Recently, the United States Semiconductor Industry Association (SIA) released a report showing that in August 2024, global semiconductor sales reached $53.1 billion, a year-on-year increase of 20.6% and a month-on-month increase of 3.5%. According to the data, global and Chinese semiconductor sales have achieved positive year-on-year growth for 10 consecutive months.

The World Semiconductor Trade Statistics Organization (WSTS) predicted in June that the global semiconductor market will grow by 16% in 2024 to reach $611 billion, a further upward revision from its spring 2024 forecast. Looking ahead to 2025, WSTS forecasts that the global semiconductor market will grow by 12.5% to reach an estimated $687 billion.

"From a cyclical point of view, global semiconductors have ushered in a strong recovery period, driven by the strong demand growth for AI and the emergence of industrial, automotive, and consumer electronics out of the inventory cycle. The Philadelphia Semiconductor Index, which represents the global semiconductor prosperity index, has also hit new highs. Gao Zelong, vice chairman of the Oriental Enterprise Innovation and Development Center and secretary-general of the New Quality Productivity Working Committee of the Chinese People's Association, told the China Times.

Gao Zelong believes that with the launch of AI-related applications, the opening of replacement cycles such as AI mobile phones and AIPC, and the increase in capital expenditure by global cloud manufacturers, the global semiconductor boom will continue to improve. Since the current round of semiconductor cycle is caused by technological progress and demand recovery, unlike the price surge caused by the previous round of supply shocks, the price increase in this cycle will be more modest, with better sustainability and a longer cycle span.

In the context of the recovery of the global semiconductor industry, China's semiconductor companies are accelerating the R&D and manufacturing of independent chips. According to the data of the Operation Monitoring and Coordination Bureau of the Ministry of Industry and Information Technology, from January to August 2024, China's integrated circuit output will be 284.5 billion, a year-on-year increase of 26.6%.

According to the latest data released by the International Semiconductor Industry Association (SEMI), in the first half of 2024, Chinese mainland's spending on chip manufacturing equipment will reach 25 billion US dollars (about 177.9 billion yuan), more than the combined needs of United States, Korea and other countries. According to SEMI's observation, in the context of the global economic slowdown, Chinese mainland is the only region where spending on chip manufacturing equipment continues to increase year-on-year, and United States, Korea and other expenditures on chip manufacturing equipment have decreased compared with the same period last year.

It has donated more than 6 billion yuan of equity

After the release of outstanding results, Yu Renrong, the founder and controlling shareholder of Weir shares, once again announced the donation of shares with a market value of about 2.8 billion yuan to the education industry.

On the evening of October 11, Weir shares announced that in order to support the development of education, support Ningbo Eastern University of Technology for approval and construction, infrastructure engineering and preparation of the school required personnel, scientific research and teaching resources, and fund Ningbo Eastern University of Technology Education Foundation to carry out charitable activities, Yu Renrong plans to donate 25 million shares of the company he holds to the Ningbo Oriental University of Technology Education Foundation, accounting for 2.06% of the company's current total share capital. Based on the latest closing price of Weir shares on October 11, the corresponding market value of the donated shares is about 2.799 billion yuan.

As of now, Yu Renrong holds about 358 million shares of Weir shares, accounting for 29.52% of the company's current total share capital, and after the donation, his shareholding ratio will drop to 27.46%.

According to the announcement, the Education Foundation of Ningbo Oriental University of Technology promised that the shares of Weir shares donated by the foundation will be combined with the controlling shareholder of Weir shares to calculate the reduction amount, and before the reduction, it will fulfill the information disclosure obligations in accordance with the disclosure requirements of the controlling shareholder of Weir shares.

Previously, Yu Renrong has also donated shares to the education industry on several occasions.

In February 2023, Weir announced that in order to support the development of education and fund Ningbo Yu Renrong Education Foundation to carry out charitable and public welfare activities, Shaoxing Weihao plans to donate 10 million shares of the company it holds to Ningbo Yu Renrong Education Foundation free of charge. Based on the closing price on the day of the announcement, the market value corresponding to this donated equity is about 850 million yuan.

In December 2023, it plans to donate 10 million unrestricted tradable shares of the company it holds to the Education Foundation of Ningbo Eastern University of Technology, and the market value of this donation is about 1.04 billion yuan based on the stock price on that day. In March this year, Shaoxing Weihao once again planned to donate 15 million shares of the company it held to the Education Foundation of Ningbo Oriental University of Technology, with a corresponding market value of about 1.499 billion yuan.

Based on the above four donations, Yu Renrong, the controlling shareholder of Weir shares, and Shaoxing Weihao, the person acting in concert, have donated about 6.2 billion yuan of shares.