Investment Rating - The industry rating is "Outperform the Market" indicating that the overall return of the industry is expected to exceed the market benchmark index by more than 5% in the next 6 to 12 months [46]. Core Insights - The Wind New Materials Index closed at 3954.95 points, up 2.88% week-on-week, with notable gains in semiconductor materials and organic silicon materials [3][9]. - Changxin Technology, a leading domestic DRAM company, has initiated its IPO process, marking a significant step in the semiconductor industry [4][27]. - Anhui Wanwei Group has successfully delivered key equipment for the domestic production of large-size polyvinyl alcohol optical films, breaking the monopoly of foreign companies [4][27]. - The semiconductor materials sector is experiencing accelerated domestic production, with significant expansion in downstream wafer fabrication plants [4][27]. - The demand for high-performance materials is expected to rise as domestic manufacturing upgrades continue, leading to rapid growth in the new materials industry [4][27]. Market Overview - The semiconductor materials index reported a week-on-week increase of 1.77%, while the organic silicon materials index rose by 8.82% [3][9]. - The top gainers in the market included Hongbai New Materials (up 24.72%) and Chenguang New Materials (up 23.3%), while the biggest losers were Ruile New Materials (down 15.98%) and Jiuri New Materials (down 7.36%) [23][24]. Recent Industry Highlights - The U.S. EVA export volume decreased by 14% year-on-year in Q1 2025, indicating a shift in export focus towards Latin America and Africa due to reduced shipments to Asia [27][28]. - A partnership was signed between Yunlu Composite Materials and XPeng Huitian to collaborate on high-performance carbon fiber composite materials for eVTOL applications [27][28].

Core Viewpoint - The company is experiencing significant growth in revenue and net profit, driven by its competitive advantage in the sputtering target materials sector and the expansion into semiconductor precision components, which opens a second growth curve for the business [2][3][4]. Group 1: Financial Performance - In Q1 2025, the company achieved revenue of 1 billion yuan, a year-on-year increase of 29.53%, and a net profit of 157 million yuan, up 163.58% year-on-year [2]. - For the year 2024, the company reported revenue of 3.605 billion yuan, representing a 38.57% year-on-year growth, and a net profit of 401 million yuan, up 56.79% year-on-year [3]. - The overall gross margin for 2024 was 28.17%, a decrease of 1.03 percentage points year-on-year, while the gross margin for ultra-pure target materials improved by 2.90 percentage points to 31.35% [3]. Group 2: Business Segments - The ultra-pure target materials segment generated sales of 2.333 billion yuan in 2024, accounting for 64.73% of total revenue, benefiting from product structure optimization and increased use of domestic raw materials [3]. - The precision components segment, covering PVD, CVD, etching, and ion implantation processes, achieved sales of 887 million yuan, representing 24.60% of total revenue, although its gross margin decreased by 2.81 percentage points to 24.27% due to capacity expansion and new product introduction [3][4]. Group 3: Market Position and Product Development - The company is a leading domestic supplier of ultra-pure metal sputtering targets, with a product range including aluminum, titanium, tantalum, and copper targets, used in advanced integrated circuit chips and flat panel displays [4]. - The company has successfully entered the global sputtering target industry’s leading tier, becoming a core supplier for major chip manufacturers such as TSMC, SMIC, SK Hynix, and UMC [4]. - The production of 300mm copper-manganese alloy targets has significantly increased, and the company has achieved stable mass production of high-density 300mm tungsten targets [4].

Investment Rating - The industry rating is "Outperform the Market" [5][53]. Core Insights - The Wind New Materials Index closed at 3844.35 points, up 1.28% week-on-week. The semiconductor materials index fell by 1.23%, while the organic silicon materials index rose by 1.4% [3][10]. - Acoor has officially launched its 5000 tons/year COC production, marking a significant milestone in its expansion projects [4][29]. - Huawei's smartphone shipments are expected to grow by 12% year-on-year in Q2 2025, making it the fastest-growing brand in the Chinese smartphone market [4][33]. Summary by Sections 1. Overall Market Review - The Wind New Materials Index increased by 1.28% this week, while the semiconductor materials index decreased by 1.23%. Other indices showed mixed results, with organic silicon materials up by 1.4% and lithium battery index down by 2.99% [3][10]. 2. Key Company Weekly Performance - Top gainers included Jiuri New Materials (21.01%), Dongyue Silicon Materials (14.14%), and Dongcai Technology (14.01%). Conversely, top losers included Xinyaqiang (-14.41%) and Changyang Technology (-7.7%) [25][27]. 3. Recent Industry Hotspots - Acoor's 5000 tons/year COC production has commenced, following successful safety assessments [4][29]. - Tuokene Technology's second-phase COC project has reached a significant milestone, with a total investment of 1.5 billion yuan and expected annual sales exceeding 5 billion yuan [29]. - The world's first GWh-level solid-state battery production line has successfully produced its first samples, showcasing advancements in battery technology [30]. - The "Quad" alliance has been formed by the US, Australia, India, and Japan to address rare earth supply issues [33]. 4. Related Data Tracking - The Philadelphia Semiconductor Index rose by 1.91% this week, indicating positive momentum in the semiconductor sector [35].

Investment Rating - The investment rating for the semiconductor industry is "Positive" (maintained) [1] Core Insights - The semiconductor industry is expected to see a recovery in downstream demand, leading to improved market conditions [3] - The domestic high-end semiconductor packaging and testing leader, Shenghe Jingwei, has entered the guidance acceptance stage for its IPO, focusing on mid-stage silicon wafer manufacturing and advanced packaging [3] - The global semiconductor packaging materials market is estimated to be approximately $21.98 billion in 2023, with a domestic localization rate of about 15% for semiconductor materials and less than 30% for packaging materials [4] Summary by Sections - **Shenghe Jingwei's IPO**: Shenghe Jingwei's IPO guidance status has changed to acceptance, with its 12-inch high-density bumping processing and packaging capabilities reaching world-class levels. The company is also developing advanced three-dimensional system integration chip business [3] - **Market Size and Localization**: The global semiconductor packaging materials market is valued at $21.98 billion, with significant portions allocated to various materials. The localization rate for semiconductor materials in China is around 15%, and for packaging materials, it is less than 30% [4] - **Key Materials and Beneficiaries**: Various materials critical to advanced packaging processes are identified, including electroplating solutions, PSPI, photoresists, polishing materials, masks, and target materials, with specific companies highlighted as beneficiaries [6]

Core Viewpoint - The article highlights the breakthrough of Kereon (Shanghai) Material Technology Co., Ltd. in achieving domestic production of CMP post-cleaning brushes, marking a significant step towards self-sufficiency in the semiconductor materials industry in China [2][21]. Group 1: Core Technology Breakthrough - Kereon has developed a semiconductor-grade PVA cleaning brush that has passed validation from leading domestic Fab factories, filling a gap in the domestic market [2][4]. - The PVA cleaning brush features three core advantages: efficient cleaning, ultra-high cleanliness, and chemical resistance, making it suitable for advanced semiconductor processes [4][6]. Group 2: Production Capacity - The first domestic production line for PVA cleaning brushes, with an annual capacity of 200,000 units, was established in Nantong Economic Development Zone, breaking the 100% reliance on imports [6][9]. - The factory operates under a class 100 cleanroom standard, ensuring minimal particle contamination and a long lifespan of over 5,000 cleaning cycles for the brushes [6][9]. Group 3: Capital Support - Kereon secured 5 million yuan in angel financing in early 2024, with plans to attract leading industry funds in 2025 to enhance production line construction and product iteration [12][13]. - The core team has over 30 years of experience in PVA downstream product development, establishing a complete technical loop from material research to mass production [12][13]. Group 4: Industry Value - The global advanced packaging market is projected to reach $85 billion by 2025, with Kereon's PVA cleaning brushes playing a crucial role in the domestic semiconductor materials localization process [16][15]. - Kereon's products can reduce costs compared to imported alternatives, enhance supply chain security, and drive technological innovation in semiconductor cleaning processes [16][15]. Group 5: Future Layout - Kereon aims to expand its application of PVA materials beyond semiconductor cleaning brushes, with plans to cover major Fab factories in China by 2025 and gradually enter international markets [18][17]. - The company is positioned to become a significant player in the global semiconductor materials sector, leveraging its advancements in technology and production capabilities [18][21].

Core Insights - The Chinese semiconductor materials industry is facing both strategic opportunities and transformation challenges amid a global semiconductor industry restructuring [1] - The report by Deloitte outlines the upgrade path for the semiconductor materials industry driven by policy incentives, technological breakthroughs, and emerging market demands [1] Group 1: Policy and Market Opportunities - The domestic semiconductor materials sector is experiencing significant growth opportunities due to downstream capacity expansion and localization policies [2] - The establishment of the National Integrated Circuit Industry Investment Fund Phase III, with a scale exceeding 300 billion yuan, is injecting vital support into the industry [2] - Tax incentives, such as income tax reductions and R&D expense deductions, are helping companies lower operational costs [2] - The construction of 12-inch wafer fabs by companies like SMIC and Hua Hong Semiconductor is accelerating the upgrade of the semiconductor materials industry [2] Group 2: Emerging Market Demands - There is a surging demand for high-performance semiconductor materials in sectors like electric vehicles, 5G communication, and AI [2] - The application of silicon carbide (SiC) in electric vehicle inverters is witnessing continuous growth [2] Group 3: Competitive Landscape and Challenges - The pressure from U.S. tariffs is pushing companies to shift towards local supply chains, creating space for domestic materials [3] - Domestic mature process materials, such as silicon carbide wafers, are priced at only one-third of international counterparts, attracting global orders to China [3] - The semiconductor materials industry faces long R&D and industrialization cycles, with initial high depreciation costs impacting short-term profitability [3] Group 4: Future Market Projections - The semiconductor materials market is expected to exceed its 2022 size by 2025, driven by emerging applications in electric vehicles, smart driving, AI, and green energy [4] - The global silicon carbide materials market is projected to surpass 6 billion USD by 2025, with automotive applications accounting for over 30% [5] Group 5: Technological Advancements - Key breakthroughs in areas like photoresists and wet electronic chemicals are anticipated within the next three to five years [5] - The National Integrated Circuit Industry Investment Fund Phase III has earmarked over 50 billion yuan for critical material R&D and industrialization [5] - Domestic companies are achieving technological breakthroughs in high-end wet electronic chemicals, such as electronic-grade phosphoric acid and sulfuric acid [5] Group 6: Market Entry and Global Expansion - The rapid development of the domestic semiconductor industry is creating more market space for new entrants, particularly in low localization sectors like photoresists and electronic specialty gases [6] - To penetrate international markets, companies need to overcome high-end material challenges and establish certification barriers while expanding global resource layouts [6]

Core Insights - The Chinese semiconductor materials industry is facing both strategic opportunities and transformation challenges amid a global industry restructuring driven by AI and new energy vehicles [1] Group 1: Policy and Market Opportunities - The domestic semiconductor materials sector is experiencing significant growth opportunities due to policy support, capacity construction, and emerging market demands [2] - The establishment of the National Integrated Circuit Industry Investment Fund Phase III, with a scale exceeding 300 billion yuan, is injecting vitality into the industry [2] - Tax incentives, such as income tax reductions and R&D expense deductions, are helping companies lower operational costs [2] - The construction of 12-inch wafer fabs by companies like SMIC and Hua Hong Semiconductor is accelerating the upgrade of the semiconductor materials industry [2] Group 2: Challenges and Market Dynamics - Despite the opportunities, the domestic semiconductor materials industry faces deep-rooted challenges, including long R&D cycles and weak short-term profitability [3] - The pressure from U.S. tariffs is pushing companies to shift towards local supply chains, creating space for domestic materials [3] - The price of mature process materials in China, such as silicon carbide wafers, is only one-third of similar international products, attracting global orders [3] Group 3: Future Market Landscape - The semiconductor materials market is expected to exceed the 2022 scale by 2025, with emerging applications in electric vehicles, AI, and green energy driving growth [4] - The global silicon carbide materials market is projected to surpass 6 billion USD by 2025, with automotive applications accounting for over 30% [5] - Key breakthroughs in areas like photoresists and wet electronic chemicals are anticipated within three to five years, supported by significant investments from the National Integrated Circuit Industry Investment Fund [5] Group 4: Competitive Landscape and Global Expansion - The rapid development of the domestic semiconductor industry is creating a larger market space for new entrants, particularly in low-penetration areas like photoresists and electronic specialty gases [6] - To penetrate international markets, companies need to overcome high-end material challenges and establish certification barriers while expanding global resource layouts [6]

Core Viewpoint - The article discusses the evolving landscape of global wafer fabrication plants, highlighting China's increasing market share in the 12-inch mature process wafer foundry sector, projected to reach 47% by 2027 from 29% in 2023 [1]. Group 1: Market Share and Growth Projections - China's share of the global 12-inch mature process wafer foundry market is expected to grow from 29% in 2023 to 47% by 2027, with an annual capacity growth rate of 27% from 2024 to 2027 [1]. - The global wafer fabrication industry is projected to see a total of 128 new fabs built from 2019 to 2024, with China accounting for 30% of these [2][3]. - The global pure wafer foundry market is expected to grow from $32.257 billion in 2023 to $47.271 billion by 2027, with a CAGR of 10% [12]. Group 2: Capacity Utilization and Competitive Landscape - In Q3 2024, SMIC and Hua Hong's capacity utilization rates were 90% and 105%, respectively, while UMC's was only 71%, indicating a competitive edge for Chinese foundries [7]. - The global 12-inch mature process capacity utilization is expected to remain between 73% and 75% from 2024 to 2027, with specific nodes like 28nm maintaining high utilization due to limited competition [13]. Group 3: Cost Analysis and Competitive Advantages - Chinese wafer foundry companies have a significant cost advantage in labor, with average salaries in mainland China at 240,900 RMB compared to 435,800 RMB in Taiwan, representing a 80.9% difference [8]. - The cost structure of wafer foundry companies shows that labor costs account for approximately 15.7% of total costs, allowing Chinese firms to maintain a competitive edge [8]. Group 4: Supply Chain and Material Localization - The domestic semiconductor materials sector is still in its early stages of localization, with 12-inch silicon wafer localization at only 10% as of 2022 [10]. - The logistics and energy supply systems in mainland China are mature, leading to lower operational costs compared to some overseas regions, although fixed facility costs have a limited impact on overall product costs [10].

Core Insights - The company has achieved significant growth in Q1 2025, with a 19.21% increase in revenue and a 25.25% increase in net profit year-on-year, marking the beginning of a high-growth phase for the company [1] - The successful production of photoresist resin has positioned the company as a key player in the domestic semiconductor materials market, with plans for ton-level production in 2025 [2][3] - The company is expanding its strategic layout across multiple sectors, including semiconductor materials and pharmaceuticals, demonstrating proactive and forward-looking strategies [4][5] Financial Performance - In 2024, the company reported revenue of 737 million yuan and a net profit of 76.6 million yuan [1] - The Q1 2025 revenue growth is attributed to improved demand in the liquid crystal materials sector, particularly in high-contrast computer displays and automotive LCD materials [1] Product Development - The company has successfully completed the mass production of KrF resin, a critical material for integrated circuit manufacturing, and has established a stable supply chain for various semiconductor materials [2][3] - The company has achieved customer validation for multiple PSPI products, laying the groundwork for further expansion in advanced packaging and display driver materials [2] Strategic Expansion - The company is actively expanding production capacity and developing new products across various business lines, including liquid crystal displays and semiconductor materials [4] - The completion of the electronic materials base in Zhejiang is a significant milestone, enabling large-scale production of semiconductor materials, particularly photoresist resin [4] Pharmaceutical Advancements - The company has successfully initiated trial production of high-level pharmaceutical intermediates and active pharmaceutical ingredients, with several key projects nearing completion [5] - New materials projects have achieved military-grade purity, showcasing the company's capabilities in high-end materials [5] Long-term Outlook - The company's long-term strategic investments and cautious management are expected to yield significant results in 2025, establishing a strong technological moat and entering a more dynamic growth phase [6]

Report Industry Investment Rating No relevant content provided. Core Views - The company's convertible bond, Dinglong Convertible Bond, has a fundraising of 910 million yuan. After deducting issuance fees, it will be used for the industrialization project of 300 tons of KrF/ArF photoresist per year, the project of a domestic industrial base for key upstream raw materials of optoelectronic semiconductor materials, and the replenishment of working capital. It is expected to be listed on April 23, 2025, with a listing price above 130 yuan [1]. - The company has successfully expanded from printing and copying consumables to semiconductor materials. With high R & D intensity, the company's semiconductor business has a gross profit margin above 60% and is rising steadily, and the comprehensive gross profit margin has rapidly increased to over 45%. As revenue grows, profitability has also improved rapidly [2]. - The company is accelerating R & D to achieve a platform - based layout of semiconductor materials. In the future, the localization rate of semiconductor materials in China will increase. According to Wind's consensus forecast, the company's expected归母 net profits in 2024 and 2025 are 507 million yuan and 690 million yuan respectively, corresponding to PEs of 55.33X and 40.67X [3]. - The company's valuation is at a medium level in the past 5 years, with good stock price elasticity and high institutional attention. The convertible bond has a general parity and good bond - bottom protection [4]. Summary by Directory I. Convertible Bond Clause Analysis - The issuance scale of the convertible bond is 910 million yuan, with a term of 6 years. The initial conversion price is 28.68 yuan. The dilution rate of full conversion to the company's A - share total share capital is 3.38%, and to the non - restricted tradable shares is 4.36%. The conversion period starts from October 9, 2025, to the maturity date (April 1, 2031). The original shareholder placement ratio is 71.10% [10]. - The 6 - year coupon rates of the convertible bond are 0.20%, 0.40%, 0.80%, 1.50%, 1.80%, and 2.00% respectively, which are comparable to the average level of recently issued convertible bonds. The redemption price at maturity is 110 yuan. The bond has an AA rating for both the issuer and the bond itself, and there is no guarantee. The additional terms are standard. As of April 21, 2025, the conversion parity is 104.32 yuan, and the pure - bond YTM is 2.44%, indicating good bond - bottom protection [11][12]. II. Underlying Stock Fundamentals - The company is a privately - owned enterprise with a general equity concentration. As of September 30, 2024, Zhu Shuangquan and Zhu Shunquan are the controlling shareholders and actual controllers, holding a total of 29.71% of the company's shares [13]. - The company has transformed from printing and copying consumables to semiconductor materials. In the first three quarters of 2024, the company achieved sales revenue of 2.425 billion yuan, a year - on - year increase of 29.54%. The revenue of optoelectronic semiconductor materials and chips reached 1.086 billion yuan, accounting for 45%, while the revenue of printing and copying general consumables was 1.322 billion yuan, with a relatively stable scale but a decreasing proportion [13][14]. - Benefiting from the increasing proportion of semiconductor materials, the company's gross profit margin has been rising year by year. The gross profit margin of printing and copying general materials fluctuates between 25% - 30%, while that of semiconductor materials has been above 60% and reached nearly 70% in Q3 2024. The current comprehensive gross profit margin is above 45% [17]. - The company's R & D investment is high, with the R & D expense ratio increasing from 10% to 12% in the past three years. It has broken foreign monopolies in multiple semiconductor material fields and formed a rich product matrix [18]. - The global semiconductor material market is expected to reach over $87 billion by 2027, and the domestic market is growing faster. However, many key semiconductor materials are still dominated by foreign companies, and the localization rate of semiconductor materials in China will increase in the future [25]. - The company has become a leading domestic CMP polishing pad manufacturer. It has also achieved mass production of CMP polishing fluid and is accelerating capacity construction. In the display material field, it has broken the monopoly of Japanese and Korean enterprises and achieved domestic leading supply. High - end semiconductor photoresist and advanced packaging materials are under R & D, and the mass - production plan of semiconductor photoresist is in progress [27]. - The company's printing and copying consumables business is developing steadily. In 2024, the company's profitability increased rapidly, with the expected归母 net profit ranging from 490 million yuan to 530 million yuan, a year - on - year increase of 120.71% - 138.73% [28]. III. Analysis of Convertible Bond Fund - Raising Projects - The company's convertible bond fundraising of 910 million yuan will be used for the industrialization project of 300 tons of KrF/ArF photoresist per year (with an investment of 804 million yuan and a planned use of 480 million yuan of the raised funds), the project of a domestic industrial base for key upstream raw materials of optoelectronic semiconductor materials (with an investment of 235 million yuan and a planned use of 170 million yuan of the raised funds), and the replenishment of 260 million yuan of working capital [35][36]. - The 300 - ton KrF/ArF photoresist industrialization project is to build a production line in Qianjiang Jianghan Salt Chemical Industrial Park, mainly for 12 - inch wafer manufacturing in advanced processes, with a planned construction period of three years. The project of a domestic industrial base for key upstream raw materials of optoelectronic semiconductor materials is to research and produce key upstream raw materials for semiconductor process materials and semiconductor display materials, with a planned construction period of two years [35].