Incident Overview
On the evening of August 25, the company disclosed its 2023 semi-annual report. 23H1 achieved revenue of 315 million yuan (+17.12% YoY) and net profit of 46 million yuan (+4.20% YoY). The share of semiconductor packaging and testing equipment manufacturing business revenue in total revenue increased from 52.69% in 2022 to 59.30% in the first half of 2023.
Analysis and judgment
Resources from mergers and acquisitions catalyze the introduction of new products one after another, and the gradual advancement of superimposed production capacity construction is expected to further promote domestic substitution of packaging equipment. In the field of semiconductor sealing and testing equipment, through the acquisition of LP (the inventor of global cutting and slicing machines) and ADT (the third largest semiconductor cutting and slicing machine company in the world), the company has comprehensive R&D capabilities, technical accumulation and production experience in equipment/components/consumables. Based on the above advantages, the company has broken the monopoly of international companies in high-end semiconductor chipping and cutting equipment, and has established cooperative relationships with leading domestic and foreign sealing and testing companies such as Sun Moon Light/Jiasheng Semiconductor/Changdian Technology/Tongfu Microelectronics/Huatian Technology. The company's product progress is that the 8230 cutting and dicing machine has been mass-sold, the 80WT 12-inch biaxial fully automatic cutting and slicing machine for wettable QFN cutting has passed verification and order forms from customers such as Sun Moon Light, etc., and the 12-inch dual-axis three-station fully automatic thinning machine 3230 was exhibited at Semicon China. In terms of production capacity, the first phase of the airport area was built and put into operation. It is expected that the annual production capacity of semiconductor splicers will reach 500 units/set by the end of 2023; and the second phase of the airport area is expected to begin construction at 23H2. We believe that the company is expected to seize domestic substitution opportunities and increase market share with its strong technical strength and continuously growing production capacity.
Localized cutting air spindles have made remarkable progress, and self-use+export sales are expected to enhance the company's overall competitiveness.
The air spindle is the most important core component of high-end cutting equipment. Currently, it mainly relies on imports.
Currently, the company's air spindle related convertible bond project has been successfully issued, and all capital raised has been put in place; the company's localized cutting spindles are already in the small-batch trial production and equipment verification stage, and it is expected that mass production will be achieved by the end of 2023. The company plans to apply localized air spindles to the company's chipper and grinder products; in addition, air spindles are also used in automotive automatic painting robots, optical lens finishing machine tools, high-precision machine tools, aerospace and military equipment, etc., and the company will also provide air spindle products to external customers at the same time. We believe that self-use of air spindles will be expected to effectively reduce the company's dependence on external suppliers and improve product cost performance; export sales of air spindles are expected to bring new performance growth momentum to the company.
The localization of blades is steady and steady. Blades are a key consumable material in the wafer/package cutting process in semiconductor packaging and testing processes. Customs data shows that the import value of tools in 2022 was significantly greater than the export value. The company quickly promoted the localization of blades through cooperation with the Israeli team: localized soft knives are in the small-batch trial production stage, and some products are sent to customers for verification; localized hard knives are in the testing and verification stage of internal equipment; the company expects localized blades to be produced in small batches by the end of 2023.
Production safety and energy efficiency monitoring services are progressing steadily. Benefiting from the national security supervision policy and the continuous advancement of intelligent coal mine development, 23H1's production safety and energy saving monitoring business achieved steady growth: revenue was about 128 million yuan, +10.24% year on year; gross margin was about 71.91%, +4.50 pct. In the coal mining sector, the company has become Huawei's certified development partner. In the future, the company is expected to continue to introduce new products to meet customer needs, thus maintaining the steady growth of this business.
Investment advice
Maintain a “buy” rating. We adjusted the company's net profit for 2023-2025 to 0.99/1.55/197 million yuan respectively. The year-on-year growth rate was +50.8%/+56.8%/+27.1%, the corresponding EPS was 0.28/0.44/0.56 yuan, respectively, and the corresponding PE valuation was 69/44/34 times, respectively.
Risk warning
R&D progress falls short of expectations, demand for semiconductor equipment falls short of expectations, and there is a risk of international trade friction.