Description of the event
Meiai Technology achieved revenue of 1,227 million yuan in 2022, an increase of 6.72% over the previous year, and Guimu's net profit of 123 million yuan, an increase of 13.70% over the previous year, after deducting the net profit of non-Gimu's 113 million yuan, an increase of 6.99% over the previous year. Among them, Q4 revenue was 389 million yuan, an increase of 1.30% over the previous year, net profit of 37 million yuan, a year-on-year decrease of 19.36%, after deducting net profit of non-return mother of 30 million yuan, a year-on-year decrease of 33.68%.
Incident comments
Increased downstream demand drives performance growth. Looking at the company's revenue composition in 2022:1) Fan filter units and filter products achieved revenue of 981 million yuan, an increase of 0.98% over the previous year. The main reason was that the semiconductor industry was affected by international relations, downstream enterprise expansion was delayed, and the company's overseas business revenue in 2022 also declined; 2) Revenue from other products was 246 million yuan, an increase of 38.01% over the previous year. The main reason is that in the context of carbon neutrality peaks, national policies are gradually tightening the control of air pollutants such as oil mist, dust, and VOCs generated during industrial production and processing. The company has developed a range of products to meet downstream demand, and customers have also gradually expanded into new energy industries such as Guoxuan Hi-Tech and Dangsheng Technology. Overall, a steady rise in downstream demand has led to growth in the company's performance.
The gross margin has been rising steadily, and the expense ratio has been declining steadily. The company's comprehensive gross margin in 2022 was 27.82%, an increase of 0.91pct over the previous year. The estimated reason is: 1) The gradual localization of product raw materials has led to a gradual decline in procurement costs (joint research and development by companies in the field of PTFE membrane materials with upstream partners, and 50% domestic substitution has been achieved). Furthermore, the company completed the acquisition of 100% of the shares in the Canadian company Circul-Aire Inc., at the end of 2022, which further strengthened the company's filter research and development capabilities, which are expected to further reduce procurement costs in the future; 2) The proportion of consumables in the product structure is expected to be further reduced; 2) The proportion of consumables in the product structure is expected to be reduced further. The increase led to a recovery in composite gross margin. The company's expenses rate decreased by 0.33pct to 15.61% year-on-year in 2022. Among them, the sales expense ratio decreased by 1.43pct to 6.08%, mainly due to the company adjusting transportation models to reduce intermediary warehouse transfer costs and the decline in warranty premiums. The management and R&D expenses rate increased by 1.14pct to 8.64%, mainly due to the company's new office usage assets and office rent and property fees this year, and the financial expense ratio decreased 0.05pct to 0.89%.
The revenue ratio declined in 2022, and is expected to improve in the future as the share of consumables increases. The company's revenue ratio in 2022 was 78%, down from 85% in 2021. The main reason is that downstream companies for the company's new construction project orders are mainly large semiconductor companies or EPC general contractors. The bargaining power is relatively strong, and the repayment cycle is slow, while the repayment period for replacement projects (consumables product orders) is short. It is expected that in the future, as the share of consumables revenue increases and the share of overseas revenue increases, the company's cash flow situation will gradually improve.
The expansion of production capacity will drive a continuous improvement in future performance. As trade friction between China and the US intensifies in the high-tech industry, the trend of localization substitution in the semiconductor industry is gradually accelerating. Furthermore, the trend of the semiconductor industry migrating to Southeast Asia is becoming more obvious. The utilization rate of the company's current production capacity has continued to be saturated. As the fund-raising projects are gradually put into operation in batches, it is expected that the company's production and sales will increase steadily, thereby driving the company's revenue and profit. The net profit of Meiai Technology in 2023-2024 is expected to be 180 million yuan and 230 million yuan respectively, up 45.72% and 27.66% year-on-year. The current stock price corresponds to the 2023 and 2024 PE of 29x and 23x respectively, giving a “buy” rating.
Risk warning
1. Fund-raising projects fall short of expected risks;
2. Overseas expansion falls short of anticipated risks.