Core Summary
On its first day of trading on the STAR Market, Zhenbao Technology's stock price soared by 1212%, rising from an issue price of 44.56 yuan to 585 yuan. A single winning ticket could generate a profit of 270,000 yuan, and the company's market value exceeded 90.8 billion yuan, with a price-earnings ratio (PE) of 445 times (the industry average is only 68 times). The company specializes in non-metallic consumables for semiconductor equipment, such as silicon electrodes and quartz discs. By integrating the entire production process from raw materials to processing and post-treatment, it has stood out in the domestic substitution market for semiconductors. However, it also faces challenges such as a small scale, concentrated customer base, and technological gaps. The high market valuation reflects the belief that the company will gain a larger share of the domestic semiconductor component market.
Detailed Analysis
1. 12-fold surge on the first day: The market is betting on the domestic substitution of "hidden" segments
How can a company with annual revenue of less than 900 million yuan be valued at 90 billion yuan? There are three key reasons:
- Scarcity of the segment: Semiconductor components have long been dominated by companies from Japan, South Korea, and the United States (for example, Mitsubishi Materials and CoorsTek hold 70%-80% of the global market share). The domestic substitution rate is less than 20%, and Zhenbao is a leading supplier in China, accounting for 4.5% of silicon components and 8.8% of quartz components, indicating significant potential for growth.
- Consumable nature: Its products are like car brake pads; as long as wafer factories are operating, the components will be corroded by plasma and need to be replaced every 6-18 months, creating a continuous demand that grows with capacity expansion. More advanced chip manufacturing processes (below 14 nanometers) accelerate component wear, further expanding the market.
- Integration barriers: While most competitors focus on single materials or steps, Zhenbao covers the entire process from raw material production (its own silicon and silicon carbide) to processing and post-treatment, providing comprehensive solutions for wafer factories, which is rare in China and enhances customer loyalty.
In short, the market is investing in a combination of domestic substitution, sustained demand, and high barriers to entry.
2. The importance of these components: The "brake pads" of semiconductor equipment
Many discuss semiconductors without considering the small parts inside the equipment:
- What do they do? Zhenbao produces silicon electrodes, quartz gas distribution discs, and silicon carbide rings. During etching processes, high-energy plasma damages these components, which must be replaced regularly.
- How important are they? Just as a car cannot run without brake pads, equipment cannot operate without these parts. Even if the equipment is domestically produced, reliance on imported components can still pose limitations.
- Market size: The domestic non-metallic semiconductor component market is worth 11.35 billion yuan in 2024, with a global market of over 160 billion yuan. This demand will continue to grow as wafer factories expand (e.g., SMIC and Huahong).
3. Why Zhenbao stands out: Its integrated approach
There are many companies in China producing semiconductor components, but Zhenbao's success comes from its integrated model:
- Comprehensive coverage: While others focus on specific materials, Zhenbao produces large-diameter single-crystal silicon rods and performs surface treatments (e.g., sputtering regeneration), ensuring cost control and product quality.
- Customer satisfaction: It offers fast delivery and customized products to meet specific process requirements. Leading wafer factories (such as SMIC and Huahong) have invested in Zhenbao, indicating recognition of its capabilities.
- Financial performance: Revenue increased from 500 million yuan to 870 million yuan from 2023 to 2025, with net profit growing from 100 million yuan to 230 million yuan, at a compound annual growth rate of 40%, and a gross margin above 55%. Growth accelerated in the first quarter of 2026.
4. Is the 90-billion yuan market value inflated? Five concerns
High valuations carry risks:
- Small scale: With annual revenue below 900 million yuan, Zhenbao is still a small player globally (compared to overseas competitors like CoorsTek). To support a 90-billion yuan market value, its revenue needs to grow significantly.
- Customer concentration: Heavy reliance on a few key customers could impact performance if they reduce orders or switch suppliers.
- Technological gap: Although Zhenbao's products match the quality of original equipment, their long-term reliability in extreme conditions still lags behind Japanese and Korean companies, requiring time to improve.
- Cash flow pressure: High accounts receivable (35% of revenue in 2025) pose a challenge for cash management.
- Business model risk: Currently, Zhenbao directly supplies wafer factories, but if equipment manufacturers require original certification or exclusive supply, it may lose market share.
A PE of 445 times means that it would take 445 years to earn back the current market value based on current profits. If domestic substitution progresses more slowly than expected, the valuation could adjust significantly.
5. Industry significance
Zhenbao's listing is a milestone as it marks the shift from replacing entire semiconductor devices to their components:
- Previous focus: Domestic substitution has focused on EDA tools, lithography machines, and etching equipment (e.g., Northern Huachuang and SMIC).
- New focus: On core components within equipment. If components are imported, domestic production remains limited. Zhenbao's high valuation indicates that capital recognizes the importance of replacing all parts of the supply chain.
- Global trend: Overseas semiconductor component companies (e.g., UCT) have seen growth rates exceeding 130% this year, indicating a shift in investment towards components due to more stable equipment demand.
Conclusion
Zhenbao Technology's stock surge reflects the market's confidence in the domestic substitution of semiconductor components. However, whether its 90-billion yuan market value is justified depends on its ability to scale up, develop higher-value products (e.g., electrostatic chucks), and meet expectations for domestic substitution. There is still a long way to go from a 4.5% market share to a valuation of 90 billion yuan. The market has already shown trust; now it's up to Zhenbao to deliver on its potential.