Baiao Chemical: Semiconductor Business Surged 389% in Q1, May Continue to Increase Investment in Semiconductor Sector

After transitioning into the semiconductor field, the second growth curve of Baiao Chemical (603360.SH) has become increasingly clear.

This evening, Baiao Chemical released its 2024 annual report, achieving revenue of 1.311 billion yuan, up 23.09% YoY, and net profit attributable to the parent company of 345 million yuan, up 5.14% YoY. Meanwhile, the company announced its annual profit distribution plan, proposing to distribute 4 bonus shares and a cash dividend of 6 yuan (tax included) per 10 shares to all shareholders.

Notably, Baiao Chemical's semiconductor business is experiencing rapid growth. The company's Q1 2025 report released on the same day showed that its semiconductor business achieved revenue of 260 million yuan in a single quarter, up 389.39% YoY. Additionally, based on confidence in future development prospects, the company plans to repurchase its own shares with self-owned and self-raised funds, with a repurchase amount of no less than 200 million yuan and no more than 400 million yuan.

As the first successful cross-border M&A case under the new policy framework of 9.24 in the A-share market, Baiao Chemical's semiconductor transformation has been closely watched by the market.

In October last year, Baiao Chemical invested 700 million yuan in cash to increase its capital and take control of Suzhou CoreWisdom Semiconductor Technology Co., Ltd. ("CoreWisdom"), while also leading an investment of 100 million yuan to become a major shareholder of CoreWisdom New (Suzhou) Technology Co., Ltd. ("CoreWisdom New").

Currently, CoreWisdom has formed six major business segments, including photolithography process equipment, wet cleaning equipment, automation equipment for semiconductor production lines, comprehensive semiconductor equipment services, key parts and consumables, and electroplating gold equipment, mainly serving sub-sectors such as integrated circuits, power semiconductors, compound semiconductors, new-type displays, power devices, and micro-electromechanical systems (MEMS).

Earlier this month, the company announced the signing of a relevant agreement with the Wuxi Xidong New City Business District Management Committee, which stipulates that the committee will provide CoreWisdom with approximately 100,000 m² of industrial space for initial use. CoreWisdom can later choose to purchase or lease the space based on actual needs, and will invest in R&D and production bases within the space, as well as build a FAB pilot line for semiconductor production line equipment verification and process R&D services.

At that time, industry chain insiders told Caixin that Baiao Chemical's Wuxi production base project includes photolithography process equipment, wet cleaning equipment, automation equipment for semiconductor production lines, and CoreWisdom New's wafer bonding equipment, with a total annual capacity of over 300 units and an annual output value exceeding 10 billion yuan.

The company also stated in its annual report that it aims to maximize the use of government subsidies, focusing on the development of automation equipment for semiconductor production lines and the R&D and production of photolithography process equipment such as coater-developers, to enhance its competitiveness.

Equally noteworthy is that Baiao Chemical's layout in the semiconductor business may continue to intensify.

This evening, the company simultaneously announced that the 12th meeting of its fifth board of directors reviewed and passed the "Proposal to Authorize the Board of Directors to Issue Shares to Specific Objects through a Simplified Procedure." The board requested the general meeting of shareholders to authorize the board to handle matters related to the issuance of shares to specific objects through a simplified procedure, with the authorization period starting from the date of approval at the 2024 annual general meeting of shareholders until the date of the 2025 annual general meeting of shareholders.

Some market participants believe that Baiao Chemical's traditional fine chemical business is already the largest producer of isothiazolinone-based industrial biocide raw materials in Asia, and a leader in production and sales in this field, with no urgent need for capital investment. The company's planned private placement is likely a further intensification of its semiconductor business, allowing it to fully utilize the window of opportunity for domestic substitution in the semiconductor industry and achieve strategic transformation.