Event: Fuchuang Precision released its 2023 semi-annual report. 2023H1 achieved revenue of 829 million yuan, + 38.61% year-on-year, and net profit of 96 million yuan,-4.80%, and deducted 25 million yuan of non-return net profit, which was-66.05% of the same period last year.
Demand for semiconductor parts market recovered and Q2 revenue growth accelerated: in the first half of 2023, the company's overseas revenue growth slowed and 2023H1 increased slightly by 1.66 per cent due to intensified trade frictions and a decline in the size of the overseas semiconductor equipment market. Benefiting from the strong domestic demand for semiconductor parts, the company's revenue from Chinese mainland is growing by more than 70%, and its business share continues to rise. Looking forward to the second half of the year, the penetration of Fortune's precision semiconductor parts in domestic equipment is expected to increase. Overseas customer demand is also expected to pick up.
Counter-cyclical expansion of production and short-term profit pressure: in order to meet the needs of customers in different regions, Fortune Precision has set up a Singapore subsidiary and laid out factories in Nantong and Beijing, which is expected to achieve a production capacity of 4 billion yuan. The company reserves talents, equipment and other resources in advance, and the labor cost of 2023H1 increases by about 24 million yuan; depreciation and amortization costs increase by about 11 million yuan, resulting in short-term pressure on profits. As the Fuchuang Precision Nantong plant starts production and contributes revenue in mid-2023, the company's profitability is expected to continue to be repaired.
Continue to increase R & D investment, new product verification breakthrough is expected: the company increases independent R & D efforts, research and development of core components and core processes, R & D expenditure of 91.8097 million yuan during the reporting period, accounting for 11.08% of business revenue, accounting for 3.35 pct over the same period last year. Fuchuang Precision maintains a high level of R & D investment, which is expected to speed up the verification of new products, ensure the security of the domestic supply chain, and help customers reduce the purchasing cost and cycle of materials.
Investment suggestion: taking into account the impact of overseas restrictions on the company's important customers, the prosperity of the industry, and the competition pattern of the semiconductor parts market, we estimate that the company's revenue in 2023-2025 will be 21.48x3249xpx 4.499 billion yuan, and the return net profit will be 3.40pm 499max 692 million respectively, corresponding to the PE of 51.47pm 35.122531 times, maintaining the "overweight" rating.
Risk tips: semiconductor market boom downward superimposed overseas supply risks, domestic semiconductor parts demand slows; high-end parts product research and development progress is not as expected; industry competition intensifies.