HUA CAPITAL - RECENT NEWS - HyT Capital Portfolio | Kema Technology Successfully Goes Public, Achieving Domestic Substitution in Semiconductor Equipment Advanced Ceramics

Identifying a Leader in a Thematic Growth Track, Witnessing Kema's Successful IPO

Hua Capital has been deeply engaged in the intelligent technology sector. As the foundational cornerstone and core driving force of information technology development, semiconductors have been a track where Hua Capital has consistently made deep investments for many years, covering areas such as chip design, IDM, semiconductor equipment, and materials. Among these, the domestic substitution of semiconductor equipment has been a particular focus area in Hua Capital's investment landscape. As a key shareholder in the only financing round Kema Technology conducted before its IPO, Sun Yelin, Founding Partner of Hua Capital, recalled the investment decision: "We insist on investing in leading companies in hard tech niche sectors. Kema Technology has persisted in innovation and R&D in the advanced ceramics field, tackling challenges head-on. It has demonstrated technological leadership and the potential to become a leader in its market segment, which closely aligns with our investment vision."

China's advanced ceramics market started relatively late. According to Frost & Sullivan data, the localization rate for advanced structural ceramics in China was only about 5% in 2015, rising to approximately 20% by 2021. Among domestic companies in the semiconductor sector, Kema Technology ranks first in market share for advanced structural ceramics, with the potential to gradually grow into an industry leader and expand into other larger-scale application areas of advanced ceramics.

"After identifying a thematic growth track, choosing the right people is crucial." Liu Xianbing, Chairman and General Manager of Kema Technology, is an alumnus of Huazhong University of Science and Technology (HUST), along with Hua Capital's two founding partners, Sun Yelin and Yang Huajun. The HUST spirit of persistence in innovation, dedication, hard work, and resilience, deeply embedded in their character, allowed them to quickly recognize and strongly resonate with each other. Under Liu Xianbing's leadership, Kema Technology has maintained long-term investment in innovation and R&D, continuously refining its process technologies and products, ultimately driving efficient growth in both business and financial performance, winning customers among leading global and domestic semiconductor equipment manufacturers, and successfully going public with strong momentum. This talent model is precisely what fits Hua Capital's criteria for selecting founders.

Diverse Application Prospects, Domestic Reshaping of the Market Landscape

Since its establishment in 2009, Kema Technology has been dedicated to the technological innovation and application expansion of advanced ceramic material components. The company has continuously increased investment in R&D and equipment, tackled technical bottlenecks, and simultaneously expanded its market presence to create new growth drivers. After more than 15 years of deep cultivation, the company has built a vertically integrated production line covering powder processing, green body forming and machining, material sintering, fine machining, inspection and testing, cleaning, and surface treatment. With outstanding equipment, excellent material properties, and quality, its products made of zirconia, alumina, aluminum nitride, and other materials have rapidly captured domestic and international markets, with a number of core indicators reaching industry-leading levels. As of August 2024, Kema Technology has been granted 78 domestic patents, including 12 invention patents.

In recent years, market demand has grown rapidly in emerging fields such as advanced ceramic components. Mainland China has played an increasingly important role in global industrial manufacturing, with strong industry development momentum and a significant increase in the domestic substitution rate. This provides a favorable opportunity for Kema Technology to further advance its advanced ceramic material components and surface treatment businesses. In addition, advanced ceramics, as materials with excellent properties, can be further expanded in the future into automotive, chemical environmental protection, textiles, and other areas with strong application prospects. Market demand is expected to grow further, driving rapid, high-quality industry development. Kema Technology has already entered the supply chains of well-known domestic and international semiconductor equipment manufacturers, achieving domestic substitution while significantly enhancing the global competitiveness of domestically produced advanced ceramic materials for semiconductor equipment.

According to public information, Kema Technology's operating revenue in 2023 was RMB 480 million, with a compound annual growth rate of 18.01% over the past three years. Net profit attributable to shareholders of the parent company was RMB 81.8607 million, with a compound annual growth rate of 10.46% over the same period. Entering 2024, the company's performance continued its strong growth trajectory. According to its listing prospectus, in the first half of 2024, the company achieved operating revenue of RMB 385 million, a year-on-year increase of 64.27%; achieved net profit attributable to parent company shareholders of RMB 139 million, a year-on-year increase of 308.89%; and achieved recurring net profit attributable to parent company shareholders of RMB 136 million, a year-on-year increase of 305.56%.

Data source: According to Frost & Sullivan, in 2021, Kema Technology accounted for approximately 72% of the total supply scale from domestic local advanced structural ceramic suppliers serving China's domestic semiconductor equipment industry, and approximately 14% of the total procurement scale of advanced structural ceramics by China's domestic semiconductor equipment industry.

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