Core Viewpoint - The article emphasizes the critical role of photoresist in semiconductor manufacturing and highlights the strategic importance of domestic production in the context of increasing global competition and supply chain uncertainties [2][4]. Company Overview - Hengkun New Materials Technology Co., Ltd. (Hengkun New Material) was established in 2004, initially focusing on the development and production of optoelectronic film devices and window lens products [4]. - In 2014, the company shifted its strategy towards integrated circuit key materials, recognizing the potential in the semiconductor industry [4]. Strategic Development - The company adopted a strategy of introducing advanced overseas products to penetrate the market, achieving significant breakthroughs in 2017 with the successful validation and sales of photoresist materials [5]. - By 2024, Hengkun New Material's R&D expenses are projected to reach 89 million, with an R&D expense ratio of 16.17%, reflecting a commitment to self-innovation [5][6]. Financial Performance - The company's revenue from self-produced photoresist materials exceeded 100 million in 2022, with a strong growth trajectory leading to projected revenues of 344 million in 2024, a nearly 180% increase from 2022 [7][10]. - The overall revenue increased from 141 million in 2021 to 548 million in 2024, with a compound annual growth rate of 57.22% [12]. Product Development and Market Position - Hengkun New Material has successfully developed over 100 self-produced products, with significant sales growth in SOC and BARC products, which ranked first among domestic manufacturers in 2023 [18][19]. - The company has replaced foreign competitors' products in the domestic market, establishing stable relationships with major domestic wafer manufacturers [21]. Market Landscape - Despite progress, the domestic market for photoresist and precursor materials is still dominated by foreign companies, with low domestic production rates for advanced technology nodes [24]. - The market for key integrated circuit materials is expected to grow at a compound annual growth rate of 17.8% from 2023 to 2028, indicating significant market potential [25]. Future Outlook - Hengkun New Material plans to raise 1 billion for R&D in new categories of precursor and photoresist materials, aiming to enhance its product matrix and increase domestic production levels [24]. - The company is positioned to transition from being a follower to a leader in the industry, contributing to the self-sufficiency and stability of China's semiconductor supply chain [26].

Core Viewpoint - Xiamen Hengkang New Materials Technology Co., Ltd. (referred to as "Hengkang New Materials") is facing scrutiny regarding its high customer concentration, declining gross margins, and the necessity of its fundraising projects as it prepares for its IPO on the Sci-Tech Innovation Board [1][6][8] Group 1: IPO and Fundraising - Hengkang New Materials disclosed its second round of inquiry responses for its IPO, which was accepted on December 26, 2024, and entered the inquiry phase on January 18, 2025 [1] - The company plans to raise approximately 1.007 billion yuan, down from the initial 1.2 billion yuan, with the revised fundraising focusing on the second phase of the integrated circuit precursor project and advanced materials project [3][4] - The company has removed the "SiARC development and industrialization project" from its fundraising plan, indicating a strategic shift possibly aimed at expediting the IPO process [4][6] Group 2: Customer Concentration - Hengkang New Materials has a high customer concentration, with the top five customers accounting for 99.22%, 97.92%, and 97.20% of revenue from 2022 to 2024, significantly higher than the industry average of around 35% [6][7] - The company relies heavily on its largest customer, with sales percentages of 72.35%, 66.47%, and 64.07% over the same period, raising concerns about potential risks if relationships with key clients deteriorate [6][7] Group 3: Gross Margin and Profitability - The gross margin for Hengkang New Materials' self-produced products has been declining, particularly for precursor materials, which reported negative margins of -329.59%, -19.91%, and -1.56% from 2022 to 2024 [8][9] - The gross margin for self-produced photolithography materials also decreased from 39.17% in 2022 to 33.47% in 2024, attributed to product structure changes and price negotiations with customers [8][10] - The company faces challenges in achieving sustainable profitability for its self-produced precursor materials, which may lead to further financial strain if large-scale orders are not secured [9][10]