The company issues its 2023 half-yearly report. In the first half of 2023, the company's high gross margin semiconductor equipment cleaning business accounted for an increase in revenue, leading to an increase in overall profitability. The category of value-added services continues to expand, and we can look forward to the future. Maintain the buy rating.

Support the main points of rating

Gross profit margin rose significantly in the second quarter of 2023. In the first half of 2023, the company's revenue was 280 million yuan, the YoY-9.0%; gross profit was 38.3%, and the YoY-9.0%; gross profit was 2.5pcts; the net profit from the return to the mother was 39 million yuan, and the YoY-2.7%; deducted the non-return net profit from 26 million yuan, YoY-25.0%. In the second quarter of 2023, the revenue was 144 million yuan, QoQ+5.6%,YoY-8.8%; gross profit was 39.8%, QoQ+5.6%,YoY-8.8%; gross profit was 39.8%, and QoQ+34.7%,YoY-8.8% was 5.7pcts. The net profit of returning mother was 0.21 yuan, and the net profit of non-returning mother was 15 million yuan, QoQ+34.7%,YoY-8.8%.

The proportion of revenue from semiconductor equipment cleaning services with high gross margin has increased, leading to an increase in overall profitability.

In the first half of 2023, revenue from semiconductor equipment cleaning services was 145 million yuan, YoY+1.9%; display panel equipment cleaning services was 62 million yuan, YoY-14.8%; maintenance and renovation revenue was 37 million yuan, YoY-35.5%; value-added services revenue was 22 million yuan, YoY-8.0%.

The category of value-added services continues to expand, and is expected to become a new growth point of the company. Fuller's value-added services include oxidation processing and ceramic spraying, currently the company's oxidation processing involves cavity baffles, electrodes and other parts, ceramic spraying involves inner lining, bell cover, electrostatic sucker, gas distribution plate, ceramic panels, inner panels, electrodes and other parts, maintenance and renovation involves CMP grinding head and so on. We expect that the company's value-added services will continue to expand and become an important growth point for the company in the future.

Valuation

Considering that the company's expansion of value-added services continues to expand and is expected to become a new performance growth point, we estimate that the company's operating income in 2023, 2024, and 2025 will be 7.63, 925, 0.81 million, 0.39, 0.48 and 0.62, respectively, and the corresponding PE will be 50.010, 40.1 and 31.1 times, respectively. Maintain the buy rating.

Main risks faced by rating

Semiconductor recovery progress is lower than expected. The progress of R & D and verification is not as expected. The pattern of market competition has deteriorated.