SQM(SH:688138) ZHESHANG SECURITIES·2025-06-16 08:06Investment Rating - The report initiates coverage with a "Buy" rating for the company [3][5]. Core Insights - The company is set to expand its production capacity significantly with a total investment of 3.5 billion RMB, focusing on high-precision and high-end semiconductor photomasks, which is expected to drive rapid growth [2][68]. - The company has shown strong revenue growth, with projected revenues of 1.434 billion RMB in 2025, representing a year-on-year growth of 29% [3][10]. - The domestic photomask market is expected to grow significantly due to the increasing demand for high-precision products and the trend of localization in the semiconductor industry [8][34]. Summary by Sections Company Overview - The company is the largest domestic photomask manufacturer, established in 1997, and has been rapidly expanding its operations, with revenues increasing from 487 million RMB in 2020 to an expected 1.112 billion RMB in 2024 [8][25]. - The company has established subsidiaries to independently operate its semiconductor business, indicating a strategic focus on this high-growth area [15][19]. Market Dynamics - The global photomask market is projected to reach 58 billion USD by 2025, with the domestic market expected to reach 100 billion RMB, driven by advancements in AI, new energy vehicles, and advanced packaging [2][59]. - The company is positioned to benefit from the ongoing shift of the panel industry to mainland China and the increasing demand for domestic alternatives in the photomask sector [34][42]. Financial Projections - The company’s revenue is forecasted to grow to 2.161 billion RMB by 2027, with a compound annual growth rate (CAGR) of approximately 26% from 2025 to 2027 [3][10]. - The net profit attributable to shareholders is expected to reach 402 million RMB by 2027, reflecting a strong growth trajectory [3][10]. Production Capacity Expansion - The company plans to add an annual production capacity of 2,665 high-precision photomasks and 25,120 high-end semiconductor photomasks following the completion of its new production base [2][68]. - The first phase of the production base construction has been completed, which will enhance the company's ability to meet the growing demand for high-precision photomasks [68]. Technological Advancements - The company is actively investing in high-end photomask technologies such as HTM and PSM, which are crucial for producing advanced photomasks [54][58]. - The development of photomasks for 130nm to 65nm processes is underway, indicating the company's commitment to advancing its technological capabilities [58][69].