Core Viewpoint - Jiangsu Xinde Semiconductor Technology Co., Ltd. has submitted an application for listing on the Hong Kong Stock Exchange, showcasing rapid growth driven by technological breakthroughs while facing challenges such as reliance on overseas markets and industry competition [1] Group 1: Company Overview - Founded in 2020, Xinde Semiconductor is one of the few advanced packaging product providers in China with comprehensive technical capabilities [1] - The company has established the "Chip and Advanced Packaging Technology Platform (CAPiC)" to enhance its technological knowledge and continuously develop cutting-edge technologies [1][3] Group 2: Financial Performance - Revenue is projected to grow from 269 million yuan in 2022 to 827 million yuan in 2024, representing a compound annual growth rate (CAGR) of over 40% [3] - Adjusted net profit is expected to turn from a loss of 154 million yuan in 2022 to a profit of 59.77 million yuan in 2024, with further growth to 59.34 million yuan in the first half of 2025 [3] - Gross loss rate is expected to decrease significantly from 79.8% in 2022 to 20.1% in 2024, and further to 16.3% in the first half of 2025 [3] Group 3: Research and Development - The company has increased its R&D investment from 58.71 million yuan in 2022 to 93.76 million yuan in 2024, with 44.38 million yuan invested in the first half of 2025 [3] - Xinde Semiconductor holds over 200 patents, including 32 invention patents and 179 utility model patents, covering key areas in packaging structure, methods, and equipment [3] Group 4: Market Challenges - The company has a long-term reliance on overseas sales, which account for over 75% of its revenue, exposing it to geopolitical changes and trade frictions [4] - Raw material costs are a significant concern, with direct materials constituting over 90% of the main business costs, and reliance on imported core materials poses potential risks [4] - Inventory levels have been rising, with a book value of 1.624 billion yuan at the end of 2024, representing over 36% of current assets, which may lead to inventory devaluation risks due to accelerated industry technology iterations [4] Group 5: Fundraising and Future Plans - The funds raised will be used to build production bases, establish new production lines, and procure related equipment to enhance manufacturing capabilities and meet growing market demand [5] - The company aims to focus on the explosive demand for advanced packaging, deepen customer cooperation, and expand market share while continuously iterating core technologies like 2.5D/3D and Fan-out to improve gross margins through scale effects and cost control [5]

Core Insights - Huada Technology has invested 2 billion yuan to establish Nanjing Huada Advanced Packaging Co., marking a significant commitment to the semiconductor packaging industry in Nanjing [1][5] - The company aims to fill the gap in domestic 2.5D/3D advanced packaging technology, which is currently non-existent in China, focusing on reducing reliance on foreign materials and equipment [2][3] Investment and Expansion - Huada Technology has continuously invested in Nanjing for seven years, with a total planned investment of 34 billion yuan to develop an advanced packaging industrial base [5][6] - The company has launched multiple projects, including a 8 billion yuan investment in 2018 and a 10 billion yuan investment in 2024 for the second phase of the advanced packaging base [5] Technological Development - The new Nanjing facility will focus on advanced packaging techniques such as 2.5D/3D, which enhance performance and reduce power consumption through chip stacking [2][3] - The company is also collaborating with leaders in AI and robotics to implement smart automation in the packaging process, aiming to replace manual labor in nearly 40 scenarios [4] Industry Impact - The establishment of Huada Advanced is part of a broader trend of growth in Nanjing's integrated circuit industry, which has seen a revenue increase of 15.4% year-on-year, reaching 26.5 billion yuan in 2024 [6] - The clustering effect of Huada Technology's investments has attracted other semiconductor companies, contributing to a complete integrated circuit industry chain in the region [6]

Investment Rating - The report maintains a "Buy" rating for the company with a target price of 42.77 RMB [4][6]. Core Views - The company reported a revenue of 9.27 billion RMB in Q2 2025, representing a year-on-year growth of 7.24% but a quarter-on-quarter decline of 0.70%. The gross margin was 14.31%, showing a slight increase from the previous quarter [1][2]. - The decline in net profit attributable to the parent company was 44.75% year-on-year, although it increased by 31.50% quarter-on-quarter, primarily due to increased R&D investments and rising financial expenses [1][2]. - The company is expected to benefit from the traditional peak season in consumer electronics in the second half of 2025, with new capacities from subsidiaries and advanced packaging business contributing to future performance growth [1][4]. Summary by Sections Financial Performance - In Q2 2025, the company achieved a revenue of 9.27 billion RMB, with a gross margin of 14.31%, which is an increase of 1.68 percentage points from Q1 2025 [1][2]. - The net profit attributable to the parent company was 267 million RMB, down 44.75% year-on-year but up 31.50% quarter-on-quarter [1][2]. Capacity Expansion and Product Optimization - The company is actively expanding its production capacity and optimizing its product structure, with a notable increase in the revenue share from computing electronics and automotive electronics [2][3]. - The revenue share from computing electronics rose from 16.2% in 2024 to 22.4% in the first half of 2025, while automotive electronics increased from 7.9% to 9.3% in the same period [2]. Market Outlook - The global semiconductor market is expected to grow by 15% in 2025, reaching 728 billion USD, which will likely drive growth in the packaging and testing industry [3]. - The company is making significant progress in capacity construction and technology development, with advancements in key technologies such as glass substrates and 2.5D/3D packaging [3]. Valuation and Earnings Forecast - The report has adjusted the net profit forecasts for 2025, 2026, and 2027 down by 20.3%, 18.8%, and 21.1% respectively, with corresponding EPS estimates of 0.91, 1.08, and 1.28 RMB [4][9]. - The target price has been revised down to 42.77 RMB from 46.74 RMB, reflecting a premium PE of 47.0x for 2025, which is higher than the industry average [4][6].