Company Profile

Anji Technology is a leading enterprise of polishing slurry in China, and the company has formed a "3+1" business map, covering a full range of chemical mechanical polishing slurries, functional wet electronic chemicals, electroplating solutions and additives, and at the same time building an independent supply capacity of core raw materials.

The company plans to issue convertible bonds to raise funds with a total amount of no more than 831 million yuan, and the application has been reviewed and approved by the Listing Review Committee of the Shanghai Stock Exchange.

Investment logic:

CMP polishing slurry: 1) The utilization rate of downstream wafer fabs has recovered, and the industry low point has passed; The capital expenditure of downstream fabs has not decreased, and the production capacity continues to grow. 2) The company continues to promote the process node of CMP polishing slurry, copper polishing slurry is being promoted and tested and verified in the advanced process node, tungsten polishing slurry is tested and verified at the 28nm node, and successfully develops polishing slurry products based on cerium oxide abrasive, the cost value of CMP nano abrasives accounts for 60-70%, the company's nano abrasives were originally imported, and the test and demonstration of self-produced cerium oxide abrasives in the company's products is progressing smoothly, and a number of products have passed the verification of the client and achieved mass production and supply. 3) The Ningbo Beilun base is expected to increase its production capacity by 31,000 tons, and the construction of production capacity is expected to be completed in March 2025. We expect the revenue of CMP polishing slurry business to be 14.86/18.44/2.260 billion yuan from 2024 to 2026, respectively, with a year-on-year growth rate of 38%/24%/23%.

Functional wet electronic chemicals: 1) The recovery of downstream fab utilization rate is driving the demand for functional wet electronic chemicals. 2) Mass production and sales of electroplating solutions and additives for advanced packaging; In the field of integrated circuit manufacturing, the copper Damascus process and through-silicon vias (TSV) electroplating solutions and additives are tested and demonstrated. 3) Ningbo Beilun has a planned production capacity of 10,000 tons of post-etching cleaning liquid, 5,000 tons of post-polishing cleaning liquid, and 8,000 tons of etching liquid in Shanghai Chemical Industry Park, and the construction of Shanghai Chemical Industry Park has started in March 2024. We expect revenue from 2024 to 2026 to be 1.98/2.35/264 million yuan, with a growth rate of 34%/22%/20% respectively.

Earnings Forecast, Valuation and Rating Without

considering the issuance of convertible bonds, we expect the company's revenue in 2024-2026 to be 17.04/21.08/2.576 billion yuan, and the net profit attributable to the parent company will be 4.41/5.63/701 million yuan respectively, a year-on-year increase of 9.60%/27.47%/24.53%. We give the company a PE valuation of 36x in 2025 and a target price of 156.77 yuan, which is covered for the first time and gives a "buy" rating.

Risk Warning:

Demand fluctuating in the semiconductor industry; Intensified competition in the polishing slurry industry; The expansion was less than expected; Risk of lifting the ban on restricted shares.