SINOPHORUS(688545)：LEADER IN ELECTRONIC-GRADE PHOSPHORIC ACID BENEFITING FROM THE INDUSTRY UPCYCLE AND BUILDING A SEMICONDUCTOR MATER

Key Takeaway


In 2025, the company achieved approximately 30% revenue growth, with profit also growing rapidly, driven by the release of new core product capacity and positive progress in new customer development. We are optimistic about the company as a leader in the wet electronic chemicals industry represented by electronic-grade phosphoric acid. It benefits from the high prosperity of the semiconductor industry driven by AI demand, builds its moat through product technology barriers established by dedicated R&D, deep stickiness with leading domestic and international customers, and cost advantages, and is advancing toward becoming a comprehensive semiconductor materials platform enterprise.


Quick Take


In 2025, the company's revenue increased steadily, profit improved stably, production and sales volumes of major products grew steadily, and positive progress was made in developing new products and new customers. By segment, the company's general wet electronic chemicals, functional wet electronic chemicals, wet electronic chemicals comprehensive recycling and utilization, and foundry services businesses achieved revenue of RMB1.093bn, RMB245mn, RMB34mn, and RMB16mn, respectively, in 2025, representing YoY changes of +32.37%, +26.44%, +16.49%, and -24.77%. Gross margins were 30.29%, 38.12%, 12.15%, and 63.82%, respectively, with YoY changes of +1.17pct, -1.55pct, +5.79pct, and +7.99pct. In terms of production and sales, both general wet electronic chemicals and functional wet electronic chemicals saw significant increases in production and sales volumes. In 2025, the company's general wet electronic chemicals production volume was 180,400 tons, up 38.70% YoY, with sales volume of 171,300 tons, up 38.65% YoY. Functional wet electronic chemicals production volume was 12,600 tons, up 35.17% YoY, with sales volume of 12,300 tons, up 35.86% YoY. The company's new capacity was steadily released, and the pace of customer qualification progressed well.


The company's performance continued its high growth in 1Q26. In 1Q26, the company achieved revenue of RMB447mn (YoY +36.72%, QoQ +8.43%), net profit attributable to shareholders of the parent company of RMB64mn (YoY +20.22%, QoQ +54.51%), and recurring net profit of RMB62mn (YoY +30.44%, QoQ +42.56%). The revenue increase was due to intensified market development efforts and higher production and sales volumes of core products, while the increase in net profit attributable to shareholders of the parent company was driven by profit growth resulting from higher revenue, reflecting a steady upward trend in overall profitability. Deepening technological R&D and innovation, with positive progress in market expansion. The semiconductor materials industry is a typical technology-intensive sector characterized by high technical content, substantial R&D investment, stringent quality control, long product certification cycles, and high supplier switching costs. Founded in 2008, the company has been deeply engaged in R&D and innovation, accumulating substantial technological expertise and experience. The company has independently developed multiple core technologies for producing wet electronic chemicals used in integrated circuit wafer manufacturing, including electronic-grade phosphoric acid, electronic-grade sulfuric acid, electronic-grade hydrogen peroxide, and high-selectivity etching solutions. These products are applicable to advanced process nodes of 28nm and below. Among them, electronic-grade phosphoric acid has reached the highest G3 grade under the SEMI C36-1121 standard, while electronic-grade sulfuric acid and electronic-grade hydrogen peroxide have achieved the highest G5 grade under SEMI universal standards. Functional wet electronic chemicals have already achieved stable supply to multiple integrated circuit manufacturers. According to the company's 2025 annual report, it has passed various product certifications from well-known domestic and international integrated circuit manufacturers such as SMIC, YMTC, CXMT, Hua Hong Group, TSMC, SK Hynix, and Entegris.


The industrial layout has been further improved, striving to build an international semiconductor material platform enterprise centered on wet electronic chemicals. In 2025, the company's electronic-grade sulfuric acid recovery and comprehensive utilization project, silicon-based precursor project, and electronic-grade hydrogen peroxide renovation and expansion project were successfully commissioned. The total production capacity for electronic chemicals and supporting raw materials reached 40,420 tons per year. Through equity cooperation, mergers and acquisitions, and other methods, the company further improved its industrial layout and diversified presence in the electronic gas and semiconductor packaging sectors. The company is currently accelerating the construction of the Shanghai Xingfu 40,000-ton/year ultra-high-purity electronic chemicals project, the 40,000-ton/year electronic-grade phosphoric acid project, and the 35-ton/year ultra-high-purity electronic-grade phosphine project. Once completed, these projects will further enrich the company's diversified product layout and add new profit growth points. In the future, the company will form an industrial development pattern with wet electronic chemicals as the core business, supported by the coordinated advancement of related businesses such as electronic gases, advanced new materials, and electronic chemical recycling and reuse, enhancing the synergy and competitive positioning of each business segment.


Earnings forecast and core investment view: We forecast the company's net profit attributable to shareholders of the parent company for 2026–2028 to be RMB321mn/RMB475mn/RMB661mn, with EPS of RMB0.89/RMB1.32/RMB1.84, corresponding to PE multiples of 121.0x/81.8x/58.9x. We are optimistic that the company will continue to deepen its product technology barriers, customer collaboration stickiness, and cost advantages, strengthening its moat while benefiting from the high prosperity of the semiconductor industry driven by AI demand, and advancing toward becoming a comprehensive semiconductor materials platform enterprise.


Risks:


(1) Risk of shortage or loss of core R&D and technical talent: The wet electronic chemicals industry is technology-intensive, and the process know-how, product formulations, and testing methods accumulated by an enterprise constitute a critical safeguard of its core competitiveness. If core technical personnel leave in a concentrated manner, it will not only directly delay ongoing R&D projects but may also lead to the leakage of key technologies. Since the R&D cycle for high-end wet electronic chemicals (especially G5-grade functional chemicals) is long and the cost of trial and error is high, the impact of a talent gap typically has a lagging effect — the financial performance in the current period may be affected only to a limited extent, but the absence of new products one to two years later will significantly weaken profitability. The gross margin of high-end products exceeds 40%, making them the main source of the company's profits. The impact of talent loss on profits is far greater than its impact on revenue.


(2) Risk of customer certification progress falling short of expectations: New products produced by projects the company is implementing or planning to implement must pass product certification by potential customers before mass sales can be achieved. If the product certification progress falls short of expectations, it will adversely affect the company's product category expansion, revenue growth, and net profit improvement. For example, if the verification cycle for a certain project is extended by six months, it may cause profits that should have been recognized in the current year to be recognized in the following year instead, thereby affecting profit forecasts.


(3) Production safety risk: Some of the company's wet electronic chemicals fall under the category of hazardous chemicals. If the company's safety management system is not effectively implemented in the future, or if employees cause improper operations due to work negligence, there is a risk of being penalized by the competent authorities or even experiencing a production safety accident, which could adversely affect the company's production and operations.


(4) Environmental protection risk: If an environmental pollution incident occurs due to reasons such as malfunctioning environmental protection facilities, the company may be penalized by the relevant authorities, and its production and operations could be adversely affected.

□.Y.A.N.G. .H.u.i./.Z.H.E.N.G.Y.i    .中.信.建.投.证.券.股.份.有.限.公.司