Core Viewpoint - Fuchuang Precision has become one of the few global manufacturers capable of mass-producing precision components for 7nm process semiconductor equipment [1][2]. Group 1: Company Overview - Fuchuang Precision is a leading domestic enterprise in precision components for semiconductor equipment, providing mechanical and electromechanical components, gas transmission systems, and more, covering various stages of chip manufacturing such as lithography, etching, film deposition, and coating development [2]. - The company focuses on three main areas: precision metal parts processing, vacuum valve products, and gas transmission systems, with 90% of metal components in the semiconductor field now being domestically produced [2][3]. Group 2: Market Potential - The gas transmission system accounts for approximately 7% to 8% of the total semiconductor equipment sales, indicating a significant market size [3]. - The domestic production rate of core technologies for gas transmission systems and key components remains low, with a high reliance on imports, presenting substantial opportunities for domestic replacement [3].

Core Viewpoint - The report highlights the strong growth potential of 富创精密 (Fuchuang Precision) in the semiconductor components sector, driven by its dual strategy in mechanical and electromechanical components and gas transmission systems, with a projected revenue increase of 47.14% in 2024 [2] Group 1: Business Strategy and Growth - The company has established a competitive advantage through its dual strategy in mechanical and electromechanical components and gas transmission systems, focusing on precision parts for semiconductor equipment [2] - In 2024, the company expects to achieve revenue of 3.04 billion yuan, with mechanical and electromechanical components and gas transmission systems contributing 2.08 billion yuan and 879 million yuan, respectively, reflecting year-on-year growth of 57.69% and 22.82% [2] - The company has developed over 70 gas cabinet design solutions for leading domestic clients, with most already in mass production, indicating a strong market position [2] Group 2: Market Expansion and Client Strategy - The company is focusing on a major client strategy, with revenue from mainland China accounting for 69.75% of total revenue, a year-on-year increase of 43.95% [3] - The company is implementing a "localization + regional collaboration" strategy to efficiently allocate resources and cover key global markets, with production bases established in Shenyang, Nantong, Beijing, and Singapore [3] - The Singapore subsidiary has completed client certification and is expected to enhance the company's competitiveness in the global market by reducing supply chain costs [3] Group 3: Mergers and Acquisitions - The company plans to acquire 100% of Beijing Yisheng Precision Semiconductor Co., Ltd. for up to 800 million yuan to enhance its semiconductor component service ecosystem [4] - A strategic investment in Zhejiang Poxin Electronic Technology Co., Ltd. aims to gain a 21.58% stake in the international gas transmission system manufacturer Compart, leveraging its technology and global supply chain [5] Group 4: Financial Projections - The company forecasts revenues of 4.03 billion yuan, 5.35 billion yuan, and 7.03 billion yuan for 2025, 2026, and 2027, respectively, with net profits projected at 213 million yuan, 412 million yuan, and 646 million yuan [6] - The current stock price corresponds to a price-to-earnings ratio of 76x, 39x, and 25x for the years 2025 to 2027, maintaining a "buy" rating [6]

Investment Rating - The investment rating for the company is "Buy" and is maintained [7] Core Views - The company is positioned as a leading player in the semiconductor components sector, focusing on mechanical and electromechanical components as well as gas transmission systems, which have been validated by major domestic and international clients and are in mass production [2][3] - The company anticipates a revenue of 3.04 billion yuan in 2024, representing a year-on-year growth of 47.14%, with net profit expected to reach 203 million yuan, a 20.13% increase [2][9] - The company is implementing a large customer strategy, with 69.75% of its revenue coming from mainland China, which has grown by 43.95% year-on-year [3] - The company is expanding its global footprint with production bases in key regions, including Shenyang, Nantong, Beijing, and Singapore, to enhance service delivery and meet customer demands [3] Summary by Sections Company Overview - The latest closing price is 52.51 yuan, with a total market capitalization of 16.1 billion yuan and a total share capital of 3.06 billion shares [1] Financial Performance - Revenue projections for 2025, 2026, and 2027 are 4.025 billion yuan, 5.350 billion yuan, and 7.030 billion yuan respectively, with corresponding net profits of 213 million yuan, 412 million yuan, and 646 million yuan [7][9] - The company expects a gross margin improvement from 25.8% in 2024 to 29.6% in 2027 [12] Strategic Initiatives - The company is pursuing acquisitions to enhance its semiconductor component platform, including a planned acquisition of Beijing Yisheng Precision Semiconductor Co., Ltd. for up to 800 million yuan [6] - The company is also investing in Zhejiang Poxin Electronic Technology Co., Ltd. to gain a stake in the international gas transmission system manufacturer Compart, aiming to leverage its technology and global supply chain [6]

Core Viewpoint - 富创精密 is focusing on building a platform-based enterprise in the semiconductor components sector, emphasizing both mechanical and gas transmission systems to enhance market share and technological capabilities [1][4]. Group 1: Financial Performance - In 2024, 富创精密 achieved operating revenue of 3.04 billion yuan, a year-on-year increase of 47.14%, and a net profit of 172 million yuan, up 98.98% [1]. - The mechanical and electromechanical components business generated 2.084 billion yuan in revenue, with a compound annual growth rate (CAGR) of 38.15% over the past five years [1]. - The gas transmission business, initiated in 2018, reported 879 million yuan in revenue for 2024, with a CAGR of 71.71% over the last five years [1]. Group 2: Global Expansion and Market Strategy - 富创精密 has established subsidiaries in the United States and Japan to enhance responsiveness to overseas clients and facilitate the integration of international and domestic technologies [2]. - The company set up a research and manufacturing base in Singapore, which has completed customer validation and deepened collaboration with international clients [2]. - In 2024, revenue from regions outside mainland China reached 897 million yuan, reflecting a year-on-year growth of 48.98% [2]. Group 3: Competitive Positioning and Industry Trends - The semiconductor components sector is characterized by high technical barriers, leading to a "stronger gets stronger" competitive landscape [2]. - Leading companies are expected to strengthen their competitive advantages through global expansion, capacity growth, and technological innovation [2]. - 富创精密 aims to build competitive barriers through platform capabilities and global layouts, balancing geopolitical risks while serving both international and domestic equipment manufacturers [3]. Group 4: Future Outlook and Strategic Initiatives - The company is optimistic about order growth for the year, with new orders in Q1 2025 showing both year-on-year and quarter-on-quarter increases [4]. - 富创精密 plans to acquire Beijing Yisheng Precision Semiconductor Co., Ltd. to enhance its platform strategy in the semiconductor components sector, with the acquisition contingent on achieving stable profitability [4]. - The company is focused on high-value products in the mechanical and electromechanical components sector and aims to deepen collaboration with Compart in the gas transmission system area to accelerate global market share expansion [4].

Core Viewpoint - The sudden resignation of the CFO and an independent director at Fuchuang Precision raises concerns about the company's management stability and operational continuity [2][4][6]. Group 1: Management Changes - Fuchuang Precision announced the resignation of CFO Cui Jing on May 19, citing personal reasons, and the general manager Zhang Xuan will temporarily assume the CFO responsibilities [4][6]. - Cui Jing had only served as CFO for 9 months, having joined the company a year ago, and was previously praised for her extensive financial expertise [6]. - Independent director Zhu Yu also resigned on the same day, with a similar reason of personal circumstances, despite having over a year left in his term [6]. Group 2: Regulatory Issues - The company received a warning from the Liaoning Securities Regulatory Bureau for failing to disclose related party transactions, which involved purchasing products from an associated company [8]. - The warning implicated several key executives, including the chairman and both CFOs, indicating a serious compliance issue within the company's governance [8]. Group 3: Financial Performance - Fuchuang Precision has experienced significant fluctuations in its financial performance since its listing, with net profits of 178 million yuan in 2022, dropping to 86.39 million yuan in 2023, and a projected 172 million yuan in 2024 [8]. - The company reported a net loss of 22.16 million yuan in the first quarter of 2025, indicating ongoing financial challenges [8]. - As of May 19, the company's market capitalization stood at 15.45 billion yuan [9].

Investment Rating - The report maintains a "Buy" rating for the company [1] Core Views - The company has achieved significant revenue growth in the semiconductor sector, successfully breaking into international top-tier clients [6] - The first quarter of 2025 saw a decline in net profit due to concentrated strategic investments impacting costs [6][8] - The company is actively expanding its production capacity both domestically and internationally, enhancing its platform strategy [8] Financial Performance Summary - In 2024, the company reported revenue of 3.04 billion yuan, a year-on-year increase of 47.14%, and a net profit of 203 million yuan, up 20.13% [3] - The first quarter of 2025 showed revenue of 762 million yuan, an 8.62% increase year-on-year, but a net loss of 22 million yuan, a decrease of 136.67% [3] - The gross margin for 2024 was 25.80%, with a slight increase from the previous year, while the first quarter of 2025 saw a decrease to 24.15% [6] Revenue and Profit Forecast - Projected revenues for 2025, 2026, and 2027 are 4.256 billion yuan, 5.426 billion yuan, and 6.686 billion yuan respectively, with growth rates of 40%, 27%, and 23% [7] - Expected net profits for the same years are 351 million yuan, 487 million yuan, and 643 million yuan, with growth rates of 73%, 39%, and 32% respectively [7] Strategic Developments - The company is enhancing its product development capabilities, achieving breakthroughs in advanced product areas and expanding its production capacity in multiple locations [8] - A strategic investment in Compart aims to leverage its technology and global supply chain resources to improve advanced component manufacturing capabilities [8]