With the recovery of demand for downstream consumer electronic products and the acceleration of domestic substitution of semiconductor chip test probes, the company actively seizes the development opportunities of the industry and continues to introduce high-quality customers around the world. Looking forward to the second half of the year, the company's orders are expected to be released, and the inflection point of performance in the second half of the year is worth looking forward to. In the long run, the company's investment products MEMS wafer-level probe and substrate-level probe domestic alternative space is huge, is expected to bring a new growth engine. Considering that the company is still in a period of rapid growth, we adjust our EPS forecast for 2022-2024 to 1.41 PE 2.01 PE for 2023, corresponding to the target price of 98 yuan, and maintain the "buy" rating.
The seasonal adjustment of MEMS's fine parts business and the increase in fees put pressure on the company's first-half results. In 2022, H1, the company achieved revenue of 169 million yuan, a decrease of 6.93% over the same period last year; net profit of 36 million yuan, a decrease of 32.81% over the same period last year; of which Q2 realized revenue of 78 million yuan, a decrease of 14.03% over the same period last year, and a net profit of 17 million yuan, a decrease of 15.55% over the same period last year. The lower-than-expected performance of 2022H1 is mainly due to the following three reasons: the revenue of MEMS fine parts products has decreased compared with the same period last year, mainly due to the seasonal adjustment of downstream end product updates in the previous year, and is expected to follow the normal shipment of new consumer electronics products in autumn this year. The company increased its R & D investment, focusing on projects such as core micro components, ultra-high frequency probe test components, substrate-level test probes and some miniature medical consumables in the field of AR/VR. Research and development costs increased by 98.53% over the same period last year. Affected by epidemic control, part of the supply chain was not smooth, major product revenue recognition was affected, and the promotion of new projects was passively delayed.
Selected to specialize in the new "Little Giant", semiconductor test probe business can be expected in the future. Recently, the company has been selected as a national special new "Little Giant" enterprise, which reflects that the company has been fully recognized by government departments and customers in terms of technology, products, services and future development prospects, which is conducive to improving the company's brand awareness and market competitiveness.
At present, the company has carried out related research on MEMS wafer test probe and substrate-level test probe, forming a related technical reserve. At the same time, the company has stepped up efforts to open up overseas markets, obtained verification plans for semiconductor chip test probes from several chip designers, and has obtained some orders from several chip designers.
MEMS wafer-level probe cards have a broad market space, and additional investment projects are determined to provide a new engine for growth. According to the data of VLSI, the global probe card market is more than 2 billion US dollars in 2020, and the substrate-level test probe market is 500 million US dollars. According to the company's forecast, the MEMS wafer test probe project is expected to reach 50% of production in 2025, bringing operating income of 286 million yuan, net profit of 45 million yuan, gross profit of 41.02%, net profit of 98 million yuan and gross profit of 38.60% after full production in 2028. It is estimated that the board-level test probe project will reach 50% production in 2025, with operating income of 64 million yuan, net profit of 15 million yuan, gross profit of 45.79% and net profit of 115 million yuan, net profit of 44 million yuan and gross profit of 44.52% after full production in 2028. If the additional investment project is put into production smoothly, it will provide a new growth engine for the company.
Risk factors: the risk of technology renewal and product upgrading; the risk of trade disputes; the risk of brain drain; the progress of new project construction or market expansion is lower than expected.
Profit forecast, valuation and rating: the company has been based on the precision manufacturing industry for more than 10 years, and the quality rate, manufacturing accuracy and capacity scale are in the forefront of the country. Looking forward to the second half of the year, benefiting from the recovery of demand for downstream consumer electronic products and the accelerated process of domestic replacement of semiconductor chip test probes, the company actively seizes the development opportunities of the industry, opens up customers, expands production capacity, and realizes its own rapid development. it is expected to achieve high performance growth.
The extension of the new technology will further strengthen the company's position and competitiveness in the domestic probe industry and contribute to the expansion of overseas markets, but taking into account the decline in performance caused by seasonal adjustment and higher R & D costs in the first half of the year, we adjust our EPS forecast for 2022-2024 to 1.41pm 2.01max 2.87 (the original forecast is 1.93pm 2.75max 4.04). With reference to the current average valuation level of comparable companies (Nagagawa Technology and Minxin shares are unanimously expected to be 54 times PE in 2023), the company is given 48 times PE in 2023, maintaining the target price of 98 yuan and maintaining the "buy" rating.