Core views:
The 2022 performance was +14% compared to the same period last year. The epidemic and production capacity constraints have been lifted, and growth is about to accelerate. The company released its 2022 annual report, achieving revenue of 1,227 billion yuan (+6.7% year-on-year) in 2022 and net profit of 123 million yuan (+13.7% year-on-year). The epidemic repeatedly affected raw material procurement and back-end sales, and production capacity bottlenecks (capacity utilization continued to exceed 100% in recent years), which was the core factor limiting the company's performance growth in 2022. However, with the gradual increase in the company's fund-raising capacity and the optimization of the epidemic policy, combined with the acceleration of the semiconductor industry's localization process, the company's subsequent orders and performance can be expected to accelerate.
Fundraising projects have accelerated the doubling of production capacity, and subsequent flexibility can be expected. The sales volume of the company's fan filter units and filter products reached 3,546,800 pieces in 2022, an increase of 10.04% over the previous year. Of the IPO capital raised, 4.2 billion yuan will be used for production capacity expansion projects, and the production capacity of leading products such as fan filter units and filters will all be close to doubling: (1) the operating and fund-raising capacity of fan filter units is 25.35 and 2400 sets/year, respectively, with a production capacity increase of 95%; (2) the operating and fund-raising capacity of mid-efficiency filters is 1,73.19 and 1.44 million pieces/year, respectively, with a capacity growth rate of 83%; (3) the production capacity of high-efficiency filters in operation and fund-raising is 4669 million units/year, respectively. It can grow at a rate of 64%.
“Customer resources+product advantage+global vision” creates a triple advantage. Through more than 20 years of deep cultivation in the cleaning field, the company has three core advantages: (1) customer resources, international cooperation with SMIC since 2006, the company participated in the latest 14nm and 28nm production line cleaning support, was responsible for Shanghai Microelectronics's first 28nm production line, and had in-depth cooperation with Intel, ST Microelectronics and some well-known overseas companies; (2) product advantages, the company's core product fan filter units and filters are at the leading level at home and abroad; (3) global vision, general manager, etc. The digital core management is of foreign nationality such as Malaysia and Japan. The focus will be on Southeast Asia's outstanding semiconductor market advantages and deep cultivation of biopharmaceuticals and atmospheric emissions management.
Profit forecasts and investment suggestions: Demand for semiconductors is increasing, and the company's performance can be expected. We expect the company's net profit to be 1.73, 2.51, and 327 million yuan from 2023 to 2025, corresponding to the latest PE of 28.86, 19.91 and 15.29 times. Referring to comparable companies and growth rates, we will give a PE valuation of 35 times in 2023, corresponding to a reasonable value of 45.15 yuan/share, maintaining the “buy” rating.
Risk warning: orders fall short of expectations; overseas expansion falls short of expectations; fund-raising projects fall short of expectations