Core Viewpoint - The company emphasizes that sustainable and stable shareholder returns are built on high-quality and sustainable development, focusing on core business, optimizing management, and enhancing profitability [1] Group 1: Company Overview - Dalian Bai'ao Chemical Co., Ltd. specializes in the research, production, and sales of isothiazolinone industrial biocide raw materials and has been in the industry for over 20 years, becoming the largest producer of such biocides in Asia [1] - In 2024, the company transitioned into the semiconductor equipment sector through its controlling stake in Suzhou Xinhuilian Semiconductor Technology Co., Ltd. and a stake in Xinhuilian New (Suzhou) Technology Co., Ltd., establishing a dual business model of industrial biocides and semiconductor equipment [1] Group 2: Financial Performance - In the first half of the year, the company reported revenue of 749 million yuan, a year-on-year increase of 28.42%, while net profit attributable to shareholders decreased by 44.22% to 91.79 million yuan [2] - The chemical business faced challenges due to external environmental factors, weak market demand, and continuously low prices, leading to sustained pressure on profitability [2] Group 3: Business Segments - The company’s industrial biocide products are primarily exported to Asia, Europe, the United States, and South America, with overall changes remaining stable [2] - Despite the pressure on profitability in the biocide segment, there are positive signs, such as a 7.69% increase in average sales prices of biocide products in the second quarter and a 21.37% decrease in the comprehensive procurement costs of key raw materials [2] - The semiconductor equipment business, led by the subsidiary Xinhuilian, remains a core strategic direction, focusing on technology development, market expansion, and operational stability [3]

Investment Rating - The report maintains a "Recommended" investment rating for the company [1][11]. Core Views - The company achieved a revenue of 1.954 billion yuan in the first half of 2025, representing a year-on-year growth of 54.25%, while the net profit attributable to shareholders decreased by 26.96% to 94.288 million yuan [2][6]. - In Q2 2025, the company reported a revenue of 1.245 billion yuan, a year-on-year increase of 56.64%, and a net profit of 241 million yuan, which is a significant year-on-year growth of 103.37% [2][6]. - The improvement in Q2 gross margin to 38.82% reflects a recovery in profitability, following a lower margin of 19.89% in Q1 due to high costs associated with new product validation [6][7]. - The company is successfully optimizing its customer structure and increasing market penetration, with contract liabilities reaching 4.536 billion yuan, up 52.07% from the end of 2024, indicating a solid order backlog [6][7]. Financial Summary - Revenue projections for 2025-2027 are 5.590 billion yuan, 7.050 billion yuan, and 8.868 billion yuan, respectively, with year-on-year growth rates of 36.2%, 26.1%, and 25.8% [5][9]. - Net profit estimates for the same period are 958 million yuan, 1.357 billion yuan, and 1.824 billion yuan, with corresponding growth rates of 39.2%, 41.7%, and 34.5% [5][9]. - The company's gross margin is expected to improve from 44.0% in 2025 to 47.1% by 2027, while the net margin is projected to increase from 17.1% to 20.6% over the same period [5][9]. - The report highlights a strong competitive position in the semiconductor equipment sector, with a focus on advanced deposition and bonding equipment, indicating significant growth potential [7][9].