Incident: The company announced its quarterly report of '23 on April 23. The company achieved revenue of 2,425 million yuan in the first quarter of 2023, -28.55% /-44.87% year on month; net profit of the mother was 142 million yuan, -57.15% yo/ -27.55% year on month. Our review is as follows:
The company's Q1 performance was affected by weak PCB demand and a marginal slowdown in the growth rate of new energy. The company achieved operating income of 2,425 million yuan in 23Q1, -28.55% year-on-year /-44.87% year-on-year; net profit of 142 million yuan, -57.15% /-27.55% year-on-year; net profit after deducting non-return to the mother was -43 million yuan, -113.27% /-127.22% year-on-month; non-recurring profit and loss mainly came from non-current asset disposal profits and losses. Gross profit margin 32.82%, year-on-year -4.28 pcs/+0.68 pcts month-on-month; net interest rate 6.39%, year-on-year -4.16 pcts/+2.02 pcts month-on-month. The year-on-year decline in Q1 revenue is mainly due to weak downstream demand in the PCB business. The Q1 PCB business revenue base was very high last year, while 23Q1 PCB downstream demand was sluggish, and PCB revenue is expected to decline sharply year-on-year; in other business aspects, the growth rate of the new energy business in 23Q1 is expected to slow marginally. The year-on-year decline in gross margin in Q1 was mainly related to the revenue structure. The share of revenue from the highly profitable PCB business declined. Looking ahead to 23Q1 and the future, although short-term performance is still under pressure, it is recommended to focus on the recovery in demand for consumer electronics and PCBs. Long-term growth logic for various business lines such as new energy and pan-semiconductors can be expected.
Looking ahead, although the company's short-term performance is affected by downstream sentiment, the gradual recovery trend will not change throughout the year, and new business can be expected to start. By business, the company's downstream consumer electronics and PCB demand is expected to experience a bottom-bottom recovery, which is expected to gradually rise throughout the year; the new energy business continues to deepen cooperation with customers such as Ningde Era, China Innovation Aviation, Yiwei Lithium Energy, and Sunwoda, and there is plenty of room for future growth. At the same time, emerging businesses such as high-power laser welding, micro-LEDs, third-generation semiconductors, HDI/IC packaging boards/flexible and rigid composite boards are expected to gradually increase, contributing to long-term growth growth.
Maintain a “Highly Recommended” investment rating. We are optimistic about the recovery of the company's traditional business and the growth prospects of various types of new businesses. We adjusted the 23-25 revenue to 17559/205.19/23.638 billion, the net profit returned to the mother to 1,609/2,090/2,501 million, corresponding to EPS 1.53/1.99/2.38 yuan, corresponding to the current stock price PE of 16.6/12.8/10.7 times, maintaining the “highly recommended” rating.
Risk warning: downstream demand falls short of expected risks, increased risk of industry competition, risk of technological iteration, macroeconomic and policy risks.