PureTech's net profit in Q1 was a loss of 15 million yuan, down 230% year-on-year

On April 30, Zhichun Technology released its first quarter performance report this year, stating that the company achieved operating income of 113 million yuan, a year-on-year decrease of 2.34%; the net profit attributable to shareholders of the listed company was -15 million yuan, a year-on-year decrease of 229.75%.

At the same time, Zhichun Technology also released its 2019 annual report stating that the company achieved operating income of 986 million yuan, a year-on-year increase of 46.34%; the net profit attributable to shareholders of the listed company was 110 million yuan, a year-on-year increase of 239.88%.

In terms of product composition, the high-purity process integrated system achieved operating income of 637 million yuan, a year-on-year decrease of 5.51%, and a gross profit margin of 26.44%, a year-on-year decrease of 1.75%; the operating income of semiconductor equipment was 82 million yuan, and the gross profit margin was 32.08%; the optical sensors and optical devices achieved operating income of 265 million yuan, and the gross profit margin was 53.59%.

In 2019, Zhichun Technology's high-purity process systems in the semiconductor field continued to receive orders from users such as Hynix, Huali, SMIC, Silan Microelectronics, Xinsheng, and Samsung. As the company has invested a large amount of resources in the research and development of the wet process division, the strategy of the high-purity process system business in the past two years has been to appropriately reduce the revenue growth rate, improve the quality of revenue, and increase the research and development of domestic blank spots in related systems. In the next 1-2 years, as the output of wet process equipment gradually increases and the company's resource allocation capabilities are strengthened, the high-purity process system can still maintain a good growth. During the reporting period, the total amount of new business orders for the high-purity process system reached approximately RMB 880 million.

In addition, the research and development, market and production of Zhichun Technology's wet cleaning equipment have made good progress. Since 2017, the company has invested heavily in the research and development of tank equipment and single-wafer equipment, forming a high-energy research and development and manufacturing team that is linked to the Shanghai Zizhu R&D Center, Qidong Factory, and subsidiaries in Japan, South Korea, and Taiwan. By the end of 2019, it had completed the research and development and manufacturing of 8-inch and 12-inch fully automatic tank equipment for multiple processes, 8-inch and 12-inch 4-cavity single-wafer equipment, and 12-inch 12-cavity advanced process single-wafer equipment.

In terms of orders, the new orders for Zhichun Technology's wet process equipment have added users such as Huahong Group ICRD, CRRC, Taiwan Powerchip, Hunan Chuwei, Xinsheng, Hantian Tiancheng, and Huawei. Among the new orders, Taiwan Powerchip is the first wet process equipment order outside mainland China. The new orders include 12-inch monolithic equipment, and the new orders include CRRC IGBT, Hantian Tiancheng silicon carbide epitaxial production lines. As of the end of the reporting period, the company has obtained nearly 40 formal orders and has completed the installation of nearly 20 equipment, including wet etching, cleaning, metal stripping, wafer recycling and other processes. The applied processes include back and edge cleaning, large silicon wafer cleaning, third-generation semiconductor etching, special application etching and other applications.

Regarding the 2020 business plan, Zhichun Technology stated that the company will be based in the semiconductor industry, focusing on four major sectors: high-purity process systems, semiconductor equipment, electronic materials and components, and services. It will plan to provide customers with equipment, materials and services that they will need in the future/domestic high-quality supply is insufficient/have certain entry barriers/match the company's existing circle of capabilities, and grow together with semiconductor industry users.

In the 2020 operating goals, the company's high-purity process system (BU1, Zhichun Integration) team focuses on a small increase in revenue and further improvement in profit quality; the wet equipment (BU2, Zhiwei Technology) team focuses on significantly increasing the market share of mature models, increasing production capacity and gross profit, and continuously investing in the research and development of new models; Electronic Materials and Components (BU3, Zhiyi Electronics) is still in the layout stage, and the team's goal is to use the existing exclusive licensing business to establish a user network and service network, while increasing investment in future business.

In terms of wafer regeneration services, the team (BU2, Zhiwei Technology's Hefei subsidiary) aims to further optimize the processes that have been developed using existing resources, and prepare for rapid mass production after the production line is completed. The main task in the first half of 2020 is to refine the needs of the user and complete the high-quality construction of the production base together with the construction team, so that the first batch of users can be introduced in the fourth quarter of the year. The goal of the team in the pharmaceutical sector (BU4, Facheng Haoxin) this year is to continue to expand the high-quality business of monoclonal antibodies, blood products, vaccines, and international personal care and food head users, and increase the business development of process digitalization.

The goal of the optoelectronics sector (BU5, Bohui Technology) team is to continue to expand in the power industry by leveraging the ubiquitous power Internet of Things, and to use the great opportunity of advanced technology application in the construction and research and development of petroleum, petrochemical and smart city lifelines to maintain the rapid development of business in this segment and increase the total business volume of optical devices.