Hwatsing Technology (SH:688120) Soochow Securities·2024-08-17 08:36Investment Rating - The investment rating for the company is "Buy" (maintained) [1] Core Views - The company's performance is steadily increasing, with revenue for the first half of 2024 reaching 1.497 billion yuan, a year-on-year increase of 21.2%, which is at the upper limit of the performance forecast. The growth in revenue is primarily driven by the development of the semiconductor equipment market and the company's competitive advantages in its products [3][4] - The company's profitability remains high, with a gross margin of 46.3% and a net profit margin of 28.9% for the first half of 2024. The operating expense ratio has slightly decreased, indicating stable profitability [3][4] - The company is expanding its product line in CMP equipment, which continues to open up growth opportunities. The company has achieved over 90% coverage of CMP process types and is actively exploring advanced packaging and compound semiconductor markets [4] - The company is expected to benefit from the rapid development of AI and high-performance computing, leading to broader applications for its CMP and thinning equipment [4] - The profit forecast for the company remains stable, with expected net profits of 1.08779 billion yuan, 1.38169 billion yuan, and 1.58054 billion yuan for 2024, 2025, and 2026 respectively, corresponding to dynamic P/E ratios of 30, 23, and 20 times [4] Summary by Sections Financial Performance - In the first half of 2024, the company reported total revenue of 1.497 billion yuan, a year-on-year increase of 21.2%. The net profit attributable to shareholders was 433 million yuan, up 15.7% year-on-year [3][11] - The second quarter of 2024 saw a revenue of 816 million yuan, a year-on-year increase of 32.0%, and a net profit of 231 million yuan, up 27.9% year-on-year [3] Profitability Metrics - The gross margin for the first half of 2024 was 46.3%, down 1.7 percentage points year-on-year, while the net profit margin was 28.9%, down 1.6 percentage points year-on-year [3] - The operating expense ratio for the first half of 2024 was 21.6%, down 2.8 percentage points year-on-year [3] Cash Flow and Liabilities - As of the end of the first half of 2024, the company's contract liabilities were 1.342 billion yuan, a year-on-year increase of 6%, while inventory was 3.08 billion yuan, up 41% year-on-year. The operating cash flow for the first half of 2024 reached 372 million yuan, a significant increase of 39% year-on-year [4] Market Position and Growth Potential - The company is enhancing its product line in CMP equipment and has successfully shipped its ultra-precision thinning machine to leading integrated circuit companies, filling a gap in the domestic chip equipment industry [4] - The company is also seeing increased demand for its products due to the growth in AI and high-performance computing sectors, which require advanced packaging technologies [4]