24. A Collection of Chinese Tech Companies — Anji Technology

【Answer 1】 Rather than castigating, it is wiser to offer reassurance: the STAR Market has granted participants an opportunity to share in the ‘lucky-draw’ IPO allocations; Technology stocks listed on the Main Board and ChiNext have also enjoyed a brief valuation uplift; A win-win scenario for all. Follow our WeChat official account: Tech Ya Nan The consensus among all observers is that these 25 newly listed companies will now enter a prolonged period of valuation correction. As this dazzling chapter draws to a close—frozen in this historic instant—this article attempts to unravel the layers, adopting an impartial perspective and striving for rational language, to briefly analyze the brightest star among these 25 listings. ‘Chinese Tech Companies’ Series, Issue No. 24 I. Reality Reflected Under the Dream of Domestic Substitution ① Chemical Mechanical Polishing (CMP) Slurry / ② Photoresist Strippers: Revenue Contribution Over Three Years: Above are Anji Technology’s two core businesses, primarily applied in integrated circuit (IC) manufacturing and advanced packaging. (Note: CMP comprises both slurry and polishing pads; Anji Technology focuses mainly on slurry.) ① Chemical Mechanical Polishing (CMP) Slurry The company’s core product—CMP slurry—holds no remarkable global market share: As shown in the table above, its global market share stood at 2.42% in 2016, 2.57% in 2017, and 2.44% in 2018. Not even stable growth can be achieved? Domestic demand for CMP slurry: As per the table above, the company nearly doubled its copper CMP slurry production capacity in 2018—but output fell below the prior year’s level? ② Photoresist Strippers Capacity utilization rate and production-sales ratio as of end-2018: As shown in the table above, the company’s capacity utilization remains low, and its production-sales ratio has consistently fallen short of 100%—is overcapacity looming? Meanwhile, the company still plans further capacity expansion—will this newly added capacity be promptly deployed into production? Will rising depreciation and amortization expenses further pressure return on net assets? From the three-year revenue and扣非 net profit growth rates, where is the evidence of high growth potential? Has the consecutive three-year decline in gross margin signaled intensifying product competition? Where lies the company’s product moat? II. Dancing Alongside Global Leaders Cabot Microelectronics (U.S.-based) Global market share: 35% 2018 Revenue: USD 590 million; Net Profit: USD 110 million; Current Market Cap: USD 3.366 billion; Static P/E: 30.6x Notably, CMP slurry accounts for 80% of Cabot’s business. In 2000, Cabot held 80% of the global CMP slurry market—its share has since declined steadily to today’s 35%. Cabot’s revenue from mainland China: 14.70% of total (RMB 515 million) Anji Technology’s revenue from mainland China: 90% of total (RMB 248 million) Differences between Cabot and Anji Technology’s CMP slurries—products, technologies, and downstream applications: As shown in the table above, their CMP slurry products appear, on the surface, to each possess distinct strengths; But in reality, does Anji focus almost exclusively on copper CMP slurry? How large is the gap in product variety and technical capability between Anji and international giants like Cabot? Versum Materials (U.S.-based) 2018 Revenue: USD 1.372 billion; Net Profit: USD 198 million; Current Market Cap: USD 5.667 billion; Static P/E: 24.83x

An Emerging Semiconductor Materials Industry Giant

【Answer 2】 Let us now refocus on the company itself. Today, Entegris is a company dedicated to semiconductor materials and equipment. Its business is divided into three segments: Semiconductor Chemicals & Equipment Materials (SCEM), Microcontamination Control (MC) equipment, and Advanced Materials Handling (AMH) solutions. Strictly speaking, Entegris is not purely a semiconductor materials company—it also engages in equipment-related businesses, primarily focused on contamination control during storage and transport of raw materials along semiconductor fabrication lines. Its customer base is highly diversified, and its product portfolio is vast—featuring over 20,000 SKUs to meet varied requirements across industries and production lines. Over many years, Entegris has consistently delivered revenue growth exceeding industry averages, achieving a 10-year CAGR of approximately 12%. Its operating margin has likewise improved—from roughly 10% earlier to 24% today. In terms of stock performance, Entegris ranks among the strongest-performing semiconductor equities over the past decade. However, note that in 2008—amid the global financial crisis and a semiconductor industry downturn—Entegris, then holding a weak market position with limited scale and revenue, suffered severely. Consequently, its stock hit an all-time low in 2009—making its subsequent recovery and sharp rebound all the more dramatic. Today, Entegris commands substantial scale within the industry. Looking ahead, the company projects sustained long-term annual growth of ~15%, continuing its healthy trajectory within the sector—driven by above-industry organic growth, strategic acquisitions with strong potential, and expansion into new sectors. Organic growth relies primarily on product competitiveness and underlying demand from the semiconductor industry; meanwhile, new-sector expansion centers on delivering materials and equipment solutions for the healthcare industry. On the external growth front, Entegris’s historical growth owes significantly to outstanding M&A execution—numerous acquisitions having shaped its current competitive product portfolio. The most consequential acquisition, however, is its recent acquisition of CCMP (Cabot Microelectronics). CCMP is a champion in its semiconductor niche—the world leader in CMP slurry, with additional businesses in polishing pads and electronic chemicals. Over many years, CCMP demonstrated robust growth. Post-merger, the new Entegris will see annual revenue surge to ~USD 3.4 billion and EBITDA reach ~USD 1 billion, further strengthening its market share in semiconductor materials—and advancing its evolution toward becoming a mid-sized semiconductor materials and equipment manufacturer. The merged entity will cover the entire CMP process chain. Based on 2021 data, the new Entegris had already achieved USD 3.4 billion in annual revenue; thus, following 2022’s growth, revenue is expected to exceed USD 3.7 billion. This acquisition employed significant debt leverage—issuing nearly USD 4 billion in bonds—yet equity dilution was minimal, with only ~10% new shares issued. Consequently, the new Entegris became a company with a USD 14.5 billion market cap and USD 3.4 billion in annual revenue.

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