Event 1: The company released its 2024 annual report, achieving annual revenue of 1.835 billion yuan, YOY+48.24%; The net profit attributable to the parent company was 534 million yuan, YOY+32.51%, and the non-net profit was 526 million yuan, YOY+63.44%, which was in line with expectations. Q4 achieved revenue of 523 million yuan in a single quarter, YOY+53.90%, QOQ+1.52%; The net profit attributable to the parent company was 141 million yuan, YOY+61.58%, QOQ-11.03%; The non-net profit was 143 million yuan, YOY+77.88%, and QOQ-3.96%. At the same time, the company announced the profit distribution in 2024, and planned to increase 3 shares for every 10 shares and distribute 4.5 yuan.

Event 2: At the same time, the company announced the "2025 Restricted Stock Incentive Plan (Draft)", which will target no more than 245 directors, senior executives and core technical personnel of the company, and the total scale of the incentive plan is 817,320 shares, accounting for 0.63% of the current total share capital. Subsequently, the company's performance and personal indicators will be assessed in 2025 and 2026 in two years to lift the sales restriction.

Comments:

The company's performance is in line with expectations, maintaining a stable growth trend, the market share of its main products has increased, the product structure has been optimized, and the gross profit margin has increased year-on-year. The global market share of the company's CMP polishing slurry has increased year by year; The introduction of functional wet electronic chemicals on the client side is smooth; The self-developed raw materials are advancing smoothly at the client level, and new progress has been made independently and controllably. The core competitiveness of the company's "3+1" technology platform has been steadily improved, and the development of polishing slurries, functional wet electronic chemicals, electroplating solutions and additives, and upstream core raw materials has been developed. Optimistic that the company will maintain steady growth and the current valuation is reasonable, it gives a "range operation" rating.

The recovery of the semiconductor industry, with a year-on-year increase in revenue and net profit: In 2024, the semiconductor industry will recover as a whole, and the company's business will be carried out smoothly, the company's performance will maintain stable growth, the R&D process and market expansion of the main business CMP polishing slurry will be smooth, and the amount and quantity of customers will meet expectations. In terms of sections: (1) The company's CMP polishing slurry segment achieved annual revenue of 1.545 billion yuan, yoy+43.7%, and the gross profit margin of the segment increased by 1.97pct year-on-year to 61.16%. The global market share has steadily increased to about 11%, and we are optimistic about the stable development of the main business. (2) In the functional wet electronic chemicals sector, the company continues to expand the product line layout, which currently covers a variety of product series such as post-etch cleaning liquid, photoresist stripping solution, post-polishing cleaning solution and etching solution, which are widely used in logic circuits, 3D NAND, DRAM, CIS and other characteristic processes and heterogeneous packaging and other fields. In 2024, the company's functional wet electronic chemicals will achieve revenue of 277 million yuan, YOY+78.91%, and the gross profit margin of the segment will increase by 10.48pct year-on-year to 43.21%. In 2024, the company's global market share of cleaning liquid has reached 4%, and there is still a lot of room for growth in the future. (3) In the electroplating solution and additives section, the construction of the electroplating solution and additives product series platform used in the field of integrated circuit manufacturing and advanced packaging has been completed. In the context of the tense international situation, although the downstream electronic foreign trade has been suppressed to a certain extent, the demand for domestic substitution has increased, and the company, as a leading enterprise of CMP polishing slurry in China, is expected to maintain a growth trend.

Gross profit margin increased, expense ratio decreased year-on-year: In 2024, the overall recovery of the semiconductor industry, coupled with the optimization of the company's revenue structure, the gross profit margin increased year-on-year, and the company's comprehensive gross profit margin increased by 2.64pct year-on-year to 59.45% in 2024. Revenue growth diluted expense ratio, R&D expense ratio decreased by 0.98pct year-on-year to 18.13%, sales expense rate decreased by 0.54pct year-on-year to 3.35%, management expense ratio decreased by 0.11pct year-on-year to 6.46%, and financial expenses decreased by 20.52 million yuan year-on-year, mainly due to the increase in foreign exchange income and deposit interest income brought about by exchange rate changes.

Improve the equity incentive mechanism and improve the enthusiasm of employees: The company has launched an equity incentive plan, and the restricted stock incentive plan in 2025 intends to grant 245 objects no more than 817,300 restricted shares, accounting for about 0.63% of the company's total share capital, and the grant price is 84.48 yuan per share. The assessment requirements for the company's performance of the equity incentive plan are that the revenue growth rate in 2025 and the cumulative revenue growth rate in 2025 and 2026 must be higher than the revenue growth rate of the global semiconductor materials market. The company has launched an employee equity incentive plan for several consecutive years, binding the rights and interests of employees to the development of the company, fully mobilizing the enthusiasm of employees, and demonstrating confidence in future development to a certain extent.

Profit forecast: We adjust the 2025/2026 profit forecast and add a new 2027 profit forecast, and it is expected that the company will achieve a net profit attributable to the parent company of 7.1/9.2/1.20 billion yuan in 2025/2026/2026 (7.5/980 million yuan before 2025/2026), yoy +33%/+29%/+31%, equivalent to EPS of 5.49/7.1/9.3 yuan, and the PE corresponding to the current A share price is 31/ 24/19x, 25-year valuation reasonable, give a "range operation" rating, recommend dip allocation.

Risk warning: 1. The price of the company's products is less than expected; 2. The release of new production capacity is less than expected;