Description of the event
The company released its 2023 mid-year report. 2023H1 achieved operating income of 583 million yuan, a year-on-year decrease of 4.03%; realized net profit of 106 million yuan, a year-on-year decrease of 6.62%; realized net profit of 74.4962 million yuan, a year-on-year decrease of 28.83%; basic earnings per share was 0.26 yuan, a year-on-year decrease of 16.13%.
Incident reviews
2023H1's revenue and net profit declined slightly compared to the same period last year, mainly affected by slowing demand in the global consumer electronics industry. Due to the slowdown in demand in the global consumer electronics industry, the continued decline in market sentiment in the PCB printed circuit board industry, and intense competition in market segments caused by structural changes in industry demand, brought many uncertainties to the development situation of the company's industry. The company's business performance was affected to a certain extent, narrowing slightly compared to the same period last year. The company actively eliminated the impact of external adverse factors through cost optimization and product upgrades, consolidated existing competitive advantages by expanding new markets and new customers, and maintained the company's smooth operation.
Drill pins were still the company's main source of revenue in the first half of 2023, and the decline in drill bit gross margin dragged down the overall gross profit margin to a certain extent. 2023H1 achieved revenue of 583 million yuan, of which drill revenue accounted for 67.95% and cutter revenue accounted for 10.78%, making it the company's top two revenue sources. The gross margin of drill needles in the first half of the year was 37.61%, down 2.26 percentage points from the same period last year; the gross margin of milling cutters was 21.24%, up 2.58 percentage points from the same period last year. Since drill needles are still the company's main source of revenue, the decline in gross margin dragged down the company's overall gross profit margin in the first half of the year to a certain extent. 2023H1's gross margin was 36.24%, down 2.35 percentage points from the same period last year.
2023H1 is actively expanding emerging industries that collaborate with its main business, and the second growth curve has performed well.
While the company is deeply involved in the PCB field, it is also actively laying out emerging fields represented by functional film products: ① The company's mobile phone security film products are positioned in the middle and high-end market and have domestic replacement properties. Currently, they are mainly distributed and have been delivered in batches; ② The company's explosion-proof film products for home appliances are mainly used in glass panels and covers for high-end home appliances, and the downstream sector is mainly used in high-end home appliance brands and other smart home appliances industries; ③ The company closely follows the “window period” of rapid development of new energy vehicles, accelerates the development and marketing of automotive optical film products, and actively participates in the early stages of customer control. development , proofing and certification, and strive to achieve batch supply as soon as possible and break the market situation where a few foreign companies monopolize the market; ④ The company's AG explosion-proof film products are mainly used in the mini LED field. Currently, they have gradually entered the certification system of downstream manufacturers, and some have begun to be supplied in small batches one after another. 2023H1's functional membrane product business achieved sales revenue of 277.5522 million yuan, an increase of 93.17% over the previous year.
Investment advice
The company is expected to achieve revenue of 1,379, 18.70 million yuan and 2,323 billion yuan (original values of 1,488, 20.75 and 2,611 billion yuan) in 2023-2025, respectively, up 13.1%, 35.6%, and 24.2%; net profit of 250, 3.51, and 450 million yuan respectively (original values were 2.86, 3.74, 458 million yuan), up 12.1%, 40.7%, and 28.1% year on year; corresponding EPS were 0.61, 0.86, 1.10 yuan respectively (original values were 0.61, 0.86, and 1.10 billion yuan, respectively) 0.70, 0.91, 1.12 yuan). Calculated at the closing price of 18.74 yuan on August 28, the corresponding PE is 30.8X, 21.9X, and 17.1X, respectively. Considering that the company's second growth curve is excellent and that its main drill business is still tough even in the face of the industry downturn (one of its competitors, Qiandian Technology 2023H1, achieved revenue of NT$1,229 million, a year-on-year decrease of 32.09%; Dingtai Hi-Tech 2023H1 achieved revenue of 583 million yuan, a year-on-year decrease of only 4.03%), it is expected that the gradual recovery of the industry will bring about a rapid recovery in the company's performance, so maintain the “Buy-B” rating.
Risk warning
The risk that the consumer electronics and PCB industry will not recover as expected; the risk that technological process changes will affect the company's competitiveness; raw material price fluctuations and supply risks; the risk of increased market competition; and the risk of overseas market expansion.