Key points of investment

Incident: On March 12, the company issued an announcement on signing daily operating contracts and related transactions.

Signing a related deal with FICONTEC is expected to accelerate the company's presence in the pan-semiconductor equipment field. Since FICONTEC signed a sales contract with a world-renowned automotive electronics customer and plans to develop long-term commercial cooperation, the company plans to sell supporting equipment and systems related to vehicle camera assembly stations within 12 months from the date the agreement is signed. The total sales amount is expected to be 40 million yuan. We believe that the company undertakes FiConTec's business 1) will help speed up the accumulation of the company's customer resources in the pan-semiconductor field, rapidly improve the company's technical level in the pan-semiconductor automation equipment field, and accelerate the company's layout in the pan-semiconductor equipment field; 2) it will help the collaborative development of the business of both parties; 3) it is expected to have a positive impact on the company's future business performance.

FICONTEC's performance in 2022 changed from loss to profit. The inflection point of performance is beginning to show that according to the company's announcement, FICONTEC's 2022 revenue was about 38.61 million euros (at the exchange rate of EUR: RMB 7. 35:1, equivalent to about RMB 280 million), net profit of about 950,000 euros (at the exchange rate of EUR: RMB 7. 35:1 is equivalent to about RMB 6.98 million), with a net interest rate of about 2.5%. Compared to January-September 2021 (net interest rate to the mother is about -6%), the performance changed from loss to profit, and the inflection point in performance is beginning to show.

AI has spawned increased computing power, and with demand for optical modules rising, FICONTEC is expected to enter the fast track of development. ChatGPT has exceeded millions of users in the two months since its launch, and is expected to become a new traffic entry point in the 5G era in the future.

In high-computing power scenarios, demand for optical modules is expected to continue to rise. FICONTEC is a global leader in the field of high-speed optical module packaging testing. Its mass-produced fully automatic equipment is suitable for the packaging and testing of 400G/800G high-speed optical modules, and the development and testing of cutting-edge 1.6T grade optical module automatic coupling equipment has been completed. As demand for optical modules increases, it is expected to enter the fast track of development.

Looking forward to the future: The “new energy+pan-semiconductor” business is developing, and there is a lot of room for upward market capitalization in the future 1) FiCONTEC: Terminated due to technical reasons such as the epidemic, the subsequent restructuring will be carried out after the timing is ripe and all conditions are met. It is expected that the overall valuation of the company will be further enhanced in the future; 2) PV process equipment: copper plating equipment has been successfully delivered, and a cooperation framework has now been signed. With HJT and PERC battery cost leveling, HJT related process equipment is expected to open up quickly; 3) Pan-semiconductor process equipment: Product equipment: Product equipment: Comparing the core source is weak , Shengmei Shanghai; Taken together, it is expected that there will still be room for the company's total market value to rise in the future

Profit forecasting

The company's net profit from 2022-2024 is expected to be 0.3, 120, and 220 million yuan respectively, with a year-on-year increase of 273% and 81% in 2023-2024, corresponding to PE 176, 47, and 26X. As a leader in high-end automation equipment, the company is expected to increase its two-wheel drive performance and maintain its “buy” rating in the future.

Risk warning

1) New technology expansion falls short of expectations; 2) The pandemic affects order delivery