北方华创(002371)

　　Naura announced a 1H24 profit alert. 1H revenue is expected to be within the rangeof RMB11.4-13.1bn, representing 35.4% to 55.9% YoY growth, respectively. Netprofit is estimated to be RMB2.6-3.0bn (YoY growth of 42.8% to 64.5%). This impliesthat 2Q24 revenue (mid-point) could be RMB6.4bn (40.8% YoY and 9.5% QoQgrowth), 5% below consensus estimate. 2Q24 net profit (mid-point) is expected to beRMB1.6bn (35.7% YoY and 45.4% QoQ growth), 9% above consensus estimate.2Q24 mid-point NPM is 25.5% vs. 19.2%/26.5% in 1Q24/2Q23. The companyattributed the growth to 1) its broad coverage of semiconductor equipment (etching,deposition, cleanser, etc.), 2) increasing market share, 3) economies of scalegradually showing, and 4) improving operational efficiency and stable decrease inexpense ratio. Maintain BUY with an unchanged TP at RMB405.

　　1H24 revenue in-line with seasonality: 1H24 revenue/NP (mid-point)accounted for 40%/50% of our 2024 full-year estimates (Rev./NP:RMB30.9bn/RMB5.5bn), or 41%/51% of Bloomberg consensus estimates(Rev./NP: RMB30.0bn/RMB5.4bn). Revenue seasonality remains consistent,with mid-point 1H24 revenue representing 40% of that of FY24E (RMB30.9bn,per our forecast), similar to 1H23 (38% of FY23 revenue). This historical patternsuggests the potential for strong sequential growth in 3Q-4Q24E, in our view.

　　Looking forward to 2H24, we expect the pace of semi supply chainlocalization in China to remain steady. Naura signed new equipment ordersexceeding RMB30bn in 2023, with over 70% related to semiconductormanufacturing tools. We expect Naura to deliver robust revenue growth on capexexpansion from downstream clients (including memory and foundry) and thesemi localization trend. In addition, we believe the company could be one of thebeneficiaries amid the recently launched “Big Fund III” (US$47.5bn) in China.

　　We reiterate our BUY rating for Naura, with an unchanged TP at RMB405,based on 39x 2024E P/E. Naura is currently our favourite pick under the semilocalization theme. Risks: 1) intensified competition from overseas and domesticpeers, and 2) escalating geopolitical tensions.