Core view

2024Q3 The company's revenue and profit increased rapidly, mainly due to the continuous expansion of the market ownership of CMP products, the gradual increase in the business scale of key consumables and maintenance services, and the gradual increase in wafer regeneration and wet equipment revenue. Based on "equipment + service", the company actively promotes the platform, continues to promote the breakthrough of more advanced process nodes of CMP products, and the thinning machine has won batch orders from leading customers in many fields, which is one of the important growth points of the company.

Event

2024Q1-3 The company achieved operating income of 2.452 billion yuan, a year-on-year increase of 33.22%; net profit attributable to the parent company was 721 million yuan, a year-on-year increase of 27.80%; net profit after deducting non-attributable to the parent company was 615 million yuan, a year-on-year increase of 33.85%.

In a single quarter, 2024Q3 achieved operating income of 955 million yuan, a year-on-year increase of 57.63%; the net profit attributable to the parent company was 288 million yuan, a year-on-year increase of 51.74%; The net profit after deducting non-attributable to the parent company was 246 million yuan, a year-on-year increase of 62.36%.

Brief comment The

platform layout has achieved remarkable results, with high revenue and performance growth in 2024Q3 and operating income of 955 million yuan, a year-on-year increase of 57.63%, mainly due to the continuous expansion of the company's CMP product market holding, the gradual increase in the business scale of key consumables and maintenance services, and the gradual increase in wafer regeneration and wet equipment revenue.

In terms of profitability, the company's gross profit margin in 2024Q3 was 45.08%, a year-on-year increase of -1.65pct, and the company's gross profit margin fluctuation was mainly caused by the change in the structure of the current acceptance products, which was a normal fluctuation, and the overall gross profit margin was still at a relatively stable level, and at the same time, it had improved by 0.15pct month-on-month. On the expense side, the company's expense ratio during 2024Q3 was 19.70%, a year-on-year increase of -3.23pct, of which the sales, management, R&D, and financial expense rates were 6.13%, 4.53%, 8.86%, and 0.19%, respectively, and a year-on-year increase of +1.11pct, -1.87pct, -3.52pct, and +1.05pct. In the context of substantial revenue growth, the company's expense ratio has improved significantly. In 2024Q3, the company's R&D expenses reached 256 million yuan, a year-on-year increase of 19.54%, and the company continued to increase R&D investment, promote CMP equipment to move towards more advanced processes, and expand thinning, scribing, cleaning, measurement and other equipment to build an "equipment + service" platform company.

On the profit side, in 2024Q3, the company achieved a net profit attributable to the parent company of 288 million yuan, a year-on-year increase of 51.74%, and the corresponding net profit margin attributable to the parent company reached 29.40%, a year-on-year increase of -1.25pct, and the net profit attributable to the parent company was 246 million yuan, a year-on-year increase of 62.36%, and the corresponding net profit margin attributable to the parent company reached 25.80%, a year-on-year increase of +0.75pct. The company's Q3 performance increased rapidly, mainly due to (1) a large year-on-year increase in revenue; (2) The amount of the company's embedded software is refunded immediately and the amount of VAT plus deduction and tax incentives increases; (3) Decrease in fair value change.

Sufficient orders in hand to support the subsequent performance growth, cash flow improvement in the context of scale expansion is obvious, and the orders in hand are sufficient, and the follow-up performance is supported. Benefiting from the batch bidding of storage and logic customers in 2024, the continuous increase in the market share of the company's main business CMP, and the expansion of new products such as cleaning, thinning, and wet processing, the company's order growth has been excellent since 2024, and the company's contract liabilities reached 1.505 billion yuan at the end of 2024Q3, an increase of 13.36% over the end of 2023; At the end of 2024Q3, the company's inventory reached 3.312 billion yuan, an increase of 37.13% from the end of 2023. Both contract liabilities and inventories have reached a record high, with sufficient orders in hand and follow-up performance support.

The expansion of business scale led to the growth of collection, and the cash flow improved significantly. The company's net cash flow from operating activities in the first three quarters of 2024 reached 876 million yuan, a year-on-year increase of 136.06%, mainly due to the expansion of the company's business scale, the large increase in sales receipts, and the increase in the amount of government subsidies and software value-added tax refunds.

Investment Suggestions

It is estimated that the company's operating income from 2024 to 2026 will be 33.06, 44.98 and 5.633 billion yuan respectively, an increase of 31.84%, 36.04% and 25.22% year-on-year respectively, and the net profit attributable to the parent company will be 9.98, 13.66 and 1.748 billion yuan respectively, an increase of 37.95%, 36.86% and 27.90% year-on-year respectively, and the corresponding PE will be 43.87x, 32.05x, 25.06x, maintaining a "buy" rating.

Risk analysis

(1) Downstream expansion is less than expected: The company's business has a strong correlation with the capital expenditure of downstream semiconductor Fab customers, and if the downstream investment and expansion willingness are reduced, the company's product sales will be affected.

(2) Intensification of trade frictions: The intensification of trade frictions between China and the United States may have an adverse impact on the company's key parts stocking.

(3) New product development is less than expected: If new product development is less than expected, it will have a negative impact on its subsequent revenue.

(4) Market competition continues to intensify: the company's competitors are internationally renowned semiconductor equipment manufacturers and domestic new semiconductor equipment companies, if the company can not effectively respond to the market competition environment, it will face adverse effects such as declining industry status.