Matters:
On August 25, 2023, the company released the 2023 semi-annual report:
1) 2023H1: The company achieved operating income of 482 million yuan, -22.34% year-on-year; gross profit margin of 38.63%, year-on-year -11.06pct; net profit attributed/net profit of 0.77/059 million yuan, with a year-on-year ratio of -59.89%/-65.56%;
2) 2023Q2: The company achieved operating income of 259 million yuan, -17.98%/+15.83% year on year; gross profit margin of 40.71%, year on/month on month -7.33pct/+4.49pct; net profit attributable to mother of 48 million yuan, year-over-year/month-on-year -51.51%/+68.18%; net profit excluding non-return net profit of 39 million yuan, -5 5.65%/+90.05% year on year.
Commentary:
The industry cycle has bottomed out and recovered, and new business continues to expand, and the company's performance has clearly reached an inflection point. The semiconductor industry cycle bottomed out and picked up, the company's operating rate improved month-on-month, 2023Q2 revenue +15.83% month-on-month to 259 million yuan, and net profit margin +5.78 pct to 18.58% month-on-month. Looking at the month-on-month trend, the company's performance inflection point has already been reached.
The inventory removal stage for pan-consumer chips such as mobile phones and security is probably nearing its end. Demand is expected to pick up in the second half of the year, and the company's capacity utilization rate is expected to continue to increase. Considering the asset-heavy nature of the sealing and testing industry, we believe the company's performance elasticity is expected to continue to be unleashed under the scale effect. At the same time, the company continues to make efforts in new fields such as automotive camera packaging and micro optical device manufacturing to open up room for growth, and future performance is expected to return to a high growth trajectory.
The company actively expands production and lays out emerging fields such as the automotive CIS, and binds high-quality customers to help long-term development. The trend of automobile electrification and intelligence is driving rapid growth in demand for vehicle cameras. The company focuses on the automotive electronics field, built the world's first 12-inch wafer-grade silicon through-hole packaging technology mass production line for automotive-grade products, and cooperates with high-quality customers such as Haowei to maintain industry leadership in automobile CIS mass production, and is expected to benefit from the explosion of downstream demand in the future. In addition, new CIS application fields such as healthcare, VR/AR, and industrial intelligence are gradually emerging, and the company has accumulated deep technology, and emerging application fields are expected to become new business growth points in the future.
International investment and mergers and acquisitions strategies continue to advance, and the company is actively deploying technologies such as high-power gallium nitride for vehicles. The company continues to promote collaborative integration with Israeli ViSiC, and also cooperates with well-known automobile manufacturers to actively promote gallium nitride product technology development and supply chain layout, and seize the development opportunities of third-generation semiconductors in the field of new energy vehicles. At the same time, the company has further increased its investment in the Dutch company Anteryon, promoted the continuous growth of Anteryon's optical design and hybrid optical lens business, and enhanced the company's mass production capacity for wafer-level miniature optical device manufacturing technology. The company lays out high-end technology fields ahead of schedule. In the future, as related technologies mature, the company relies on first-mover accumulation or will fully benefit from the growth of new technologies and fields.
Investment advice: As a leader in the CIS wafer-level packaging segment, the company has deep technology accumulation and an excellent customer structure. It is expected to continue to benefit from the high growth in automotive CIS demand and the emergence of new CIS application scenarios. Considering that the recovery in downstream sectors such as mobile phones and security fell short of expectations, we lowered the company's net profit forecast for 2023-2025 from 300/457/621 million yuan to 2.05/358/504 million yuan, corresponding to EPS of 0.31/0.55/0.77 yuan. Considering the company's historical PE valuation range and the valuation situation of comparable companies, 40 times PE in 2024 was given. The target price was 21.9 yuan/share, maintaining the “strong promotion” rating.
Risk warning: Downstream sectors such as mobile phones and security fall short of expectations; changes in the external trade environment cause uncertainty; new products and new market expansion progress falls short of expectations.