Core Viewpoint - ChipSource Micro has become the only domestic company capable of providing mass-produced mid-to-high-end coating and developing equipment in China [1][2]. Group 1: Industry Context - The photolithography process is crucial in integrated circuit manufacturing, accounting for 50% of production time and 30% of costs. The domestic replacement rate for photolithography machines is less than 3%, while the coating and developing equipment, which is highly monopolized by Japanese companies, has a replacement rate of less than 10% [2][4]. - Coating and developing machines, along with photolithography machines and photoresists, are considered the three essential elements of the photolithography process [2]. Group 2: Company Development - ChipSource Micro was founded in 2002 when the domestic semiconductor market was undeveloped, lacking products, supply chains, and customers. The company has grown from 4-inch and 6-inch wafers to 8-inch and 12-inch, expanding from LED to advanced packaging and front-end fields [2]. - The company successfully went public on the Shanghai Stock Exchange's Sci-Tech Innovation Board in 2019, becoming the first stock from Liaoning Province on this board, and has since become a leader in the domestic coating and developing equipment sector [2]. Group 3: Market Position and Growth Potential - The low domestic replacement rate indicates significant growth potential. ChipSource Micro's front-end equipment covers all process nodes above 28nm, accounting for over 90% of China's mature semiconductor processes. The company has achieved international advanced levels in front-end physical cleaning equipment, becoming the market leader domestically [4]. - In the advanced packaging sector, ChipSource Micro has over 50% market share as a key supplier of mass production equipment, while also expanding into emerging fields like 2.5D and 3D packaging [4]. Group 4: R&D and Innovation - ChipSource Micro has maintained R&D expenses at over 10% of its revenue for several years, with R&D investment reaching 297 million yuan in 2024, a nearly 50% increase year-on-year [4]. - The company emphasizes the complexity of coating and developing equipment, which consists of over 150 units and requires high precision and reliability to avoid affecting the performance of photolithography machines [5].

Investment Rating - The investment rating for the company is "Buy-A" with a target price of 115.85 CNY per share, maintaining the rating [5][9]. Core Views - The company achieved record high performance in Q4 2024, with revenue of 6.49 billion CNY, a year-on-year increase of 27.13%, and a net profit of 0.95 billion CNY, a year-on-year increase of 213.09% [1]. - The company has made significant breakthroughs in the semiconductor equipment sector, securing orders from leading domestic clients in both front-end and back-end equipment [2][3]. - The strategic investment from Northern Huachuang, which will become the largest shareholder with a 17.88% stake, is expected to enhance the company's competitiveness in the semiconductor industry [4]. Financial Performance - In 2024, the company reported total revenue of 1.754 billion CNY, a slight increase of 2.13% year-on-year, and a net profit of 203 million CNY, a decrease of 19.08% year-on-year [1][11]. - The projected revenues for 2025, 2026, and 2027 are 2.648 billion CNY, 3.429 billion CNY, and 4.183 billion CNY respectively, with net profits expected to be 339 million CNY, 493 million CNY, and 653 million CNY [9][11]. Market Position and Growth Potential - The company has established itself as a leader in the domestic semiconductor equipment market, particularly in photoresist coating and developing products, with strong order growth from both domestic and international clients [2][3]. - The introduction of new products, such as the KS-CM300/200 chemical cleaning machine, has broken foreign monopolies and is expected to drive further growth [3]. Valuation Metrics - The company is valued at a price-to-sales (PS) ratio of 8.8 for 2025, reflecting its leading position in the front-end equipment market and promising growth in back-end products [9][12].