Event
On August 29, 2023, the company disclosed its semi-annual report for 2023. 2023H1 achieved revenue of 436 million yuan, a decrease of 25.30% over the same period last year, a net profit of 52 million yuan, an increase of 33.57% over the same period last year, and a deduction of 42 million yuan for non-return net profit, an increase of 8.46% over the same period last year. The government subsidy of 23H1 company was 5.5 million yuan, and the investment income was 6.58 million yuan. Of this total, Q2 alone achieved revenue of 244 million yuan, down 20.94% from the same period last year, up 26.47% from the previous year, realized net profit of 25 million yuan from the same period last year, down 7.91% from the same period last year, increased by 54.08% from the previous year, and deducted 22 million yuan from the previous year, an increase of 24.72% over the same period last year and 5% from the previous year.
Comment
Downstream demand recovery, performance in line with expectations, raw material prices affect Q2 gross profit margin. Based on the characteristics of small products and large market of microelectronic welding materials, the company continues to strengthen cooperation with original high-quality customers, actively develop industry-leading customers, and promote the growth of revenue-side scale.
23H1's main downstream home appliances, LED demand recovery, while the company in the new energy, photovoltaic and semiconductor areas of active layout, further deepen cooperation with high-quality customers. Due to the high tin price in the same period last year (from an average price of 333 million yuan / ton to 2078 million yuan / ton, a decrease of nearly 33.66%), 23H1 sales increased, but prices fell, resulting in a 25.30% year-on-year decrease in revenue in the first half of the year. On the profit side, as the main cost of the company's products is tin alloy powder, 2023Q2 is affected by tin prices, the company's profitability declined. The overall gross profit margin of 23H1 is 22.54%. The gross profit margin of Q2 is 21.36%, a month-on-month decline of 2.67pct. However, benefiting from the company's pricing model, the material price does not affect the company's unit product profit, and the profit transformation brought by the growth of sales volume is better. As the tin price fluctuation tends to stabilize, the company's year-on-year operating income has achieved positive growth in June. From a product point of view, the gross profit margin of 23H1 microelectronic welding materials is 16.06%, an increase of 5.39pct over the same period last year, and that of microelectronics-assisted welding materials is 50.34%, an increase of 5.11pct over the same period last year. At the same time, corporate financial income and government subsidies have a positive contribution to the net profit, realizing the positive growth of operating net profit compared with the same period last year.
Serve high-quality leading customers in many fields, and be optimistic about the opportunities of import substitution space in the future. In the long run, the company's main service segments are leading customers, with home appliance LED as the main application field, while communications customers include Huawei and ZTE, photovoltaic customers include Jingke technology and Jing'ao technology, and new energy vehicle customers have well-known brands such as BYD and Great Wall. Domestic enterprises represented by Huawei, ZTE Corporation and Haikangwei have turned to domestic microelectronic welding material suppliers, speeding up the import substitution of electronic welding products, and the company will continue to benefit as the domestic leading manufacturer of the subdivision track.
Investment suggestion
It is estimated that the 23-25 net profit will be RMB 1.21, 190, 263 million, which is + 46.8%, 56.1%, 38.5%, corresponding to PE, which is 23-15-11, and the buy rating will be maintained.
Risk hint
New product research and development risk, raw material price fluctuation risk, customer expansion less than expected risk.