Event: The company released the third quarter report of 2024, and the company achieved revenue of 3.977 billion yuan in the first three quarters of 2024, a year-on-year increase of +44.62%; the net profit attributable to the parent company was 758 million yuan, a year-on-year increase of +12.72%; The net profit was 741 million yuan, a year-on-year increase of +15.84%. Among them, the company will achieve revenue of 1.573 billion yuan in Q3 2024, +37.96% year-on-year and +6.09% month-on-month; the net profit attributable to the parent company was 315 million yuan, +35.09% year-on-year and -13.22% month-on-month; The net profit was 306 million yuan, +31.41% year-on-year and -12.54% month-on-month.

Increasing demand for equipment in the industry, continued to perform well: In the first three quarters of 2024, the company's revenue grew rapidly, benefiting from the increasing demand for equipment in the domestic semiconductor industry, the expansion of new customers and the remarkable development of new markets. In the first three quarters of 2024, the company's gross profit margin was 48.47%, a year-on-year increase of -4.69pcts, and the net profit margin was 19.07%, a year-on-year increase of -5.39pct. In terms of expenses, in the first three quarters of 2024, the company's sales/management/R&D/financial expense ratio was 7.95%/5.68%/13.55%/0.24%, respectively, with year-on-year changes of -1.32/+1.06/-0.88/+1.52pcts, respectively.

It is planned to raise funds to build a test platform to accelerate the iterative research and development of equipment: On November 12, the company announced that it intends to issue shares to specific objects to raise a total of no more than 4.5 billion yuan, and after deducting the issuance costs, the net funds raised are intended to be invested in R&D and process test platform construction projects, high-end semiconductor equipment iterative R&D projects, and replenishment of working capital. Among them, the "R&D and process test platform construction project" will draw on the experience of international semiconductor equipment leading enterprises in setting up their own process test test lines, use the company's existing process test clean room to simulate the production environment of the wafer manufacturing plant, configure the necessary R&D and testing instruments and purchased equipment such as lithography machines, CMPs, ion implanters, etc., and combine a variety of self-made process equipment to build an integrated circuit equipment R&D and process test platform, so as to improve the company's industrial layout of R&D and testing links and enhance R&D and testing capabilities. Provide more complete testing services for the company's products from R&D to finalization. The "Iterative R&D Project of High-end Semiconductor Equipment" mainly carries out further iterative development for projects that have formed the overall design scheme of the equipment through the purchase of R&D software and hardware equipment, equipped with corresponding R&D personnel, to ensure that key technologies and equipment have differentiated global independent intellectual property rights, and to help the company expand the Chinese market and explore the international market. This fundraising project is in line with the international development trend and is expected to help the company become a comprehensive integrated circuit equipment enterprise with multiple products.

Semiconductor industry expected to return to growth, cleaning equipment to take the lead: WSTS expects global semiconductor sales to increase by 16% to a record $611.2 billion in 2024, up from $526.9 billion in 2023. The global semiconductor market is expected to grow by 12.5% to US$687.4 billion in 2025. The semiconductor equipment market has huge opportunities, and the company's core technology is mainly used in semiconductor cleaning equipment, among which SAPS megasonic cleaning equipment has reached the international advanced, TEBO megasonic cleaning equipment, single wafer trough combination Tahoe high temperature sulfuric acid cleaning equipment and so on have reached the international leading. The company's SAPS megasonic cleaning and Tahoe medium and low temperature SPM cleaning equipment can serve 30% of the global cleaning market, which is conducive to the expansion of overseas customer channels and occupy a dominant position in the market, bringing economic benefits to the company's development. With the continuous advancement of the company's product research and development, more new products will enter the overseas market in the future. In addition, the company's market share will be further expanded, and the company is currently launching the Ultra C bev-p panel edge etching equipment The panel is square, which can solve the edge cleaning of the edge of the square piece. The equipment is designed for edge etching and cleaning in copper-related processes, and can handle edge etching on the front and back of the panel at the same time, significantly improving process efficiency and product reliability, and is very important in the future of panel-level packaging, especially advanced packaging.

Raise Earnings Forecast to "Buy": The company's main products include semiconductor cleaning equipment, semiconductor electroplating equipment and advanced packaging wet processing equipment, and many of the company's equipment technologies have reached the international leading level.

We are optimistic about the company's leading edge in the field of cleaning equipment, and in the future, the company is expected to benefit from downstream customers to actively expand production to maintain capital expenditure, and with the competitive advantage of differentiated equipment, to achieve rapid growth in performance, the company's furnace equipment and Ultra C bev-p panel edge etching equipment may become a new performance growth point, so it has been upgraded to a "buy" rating. Combined with the company's performance in the first three quarters of 2024, the company's order delivery is smooth, and new products continue to expand market share, so the profit forecast is raised. It is estimated that the company's net profit attributable to the parent company in 2024-2026 will be 12.14/15.10/1.850 billion yuan, the corresponding EPS will be 2.78/3.46/4.24 yuan, and the corresponding PE will be 40/32/26 times.

Risk warning: the risk of failure to issue shares to specific targets; High risk of customer concentration; The technology iteration is less than expected; Market competition intensifies the risk.