Main points of investment
Events:
1. The company released its third quarterly report for 2023: revenue in the first three quarters of 2023 was 1.13 billion yuan, down 20% from the same period last year; net profit from its mother was 120 million yuan, down 35% from the same period last year. Of this total, the revenue in the third quarter was 390 million yuan, down 25% from the same period last year, while the net profit of returning home was 50 million yuan, down 31% from the same period last year.
2. It is proposed to sign a project construction agreement with the people's Government of Triangle Town, Zhongshan City, Guangdong Province.
Due to the decline in demand and the high base of rare gases in the same period last year, third-quarter results fell 31% year-on-year (1) revenue fell 25% in the third quarter of 2023. According to SIA data, semiconductor sales in China fell 19% and 13% in July and August 2023 compared with the same period last year. According to Deqi headline data, the average ex-factory prices of krypton, xenon and neon in the third quarter of 2023 were 672 yuan per cubic meter, 58984 yuan per cubic meter, down 98%, 89% and 97% respectively from the same period last year. (2) the gross profit margin in the third quarter was 32.1%, an increase of 3.0pct over the same period last year and an increase of 3.8pct compared with the same period last year. (3) in the third quarter of 2023, the sales expense rate, management expense rate, R & D expense rate and financial expense rate were 6.3%, 6.1%, 3.3% and 1.8% respectively, with year-on-year changes in 2.6pct, 1.1pct, 0.2pct and 3.4pct.
The company plans to sign an agreement with the people's Government of Triangle Town, Zhongshan City, Guangdong Province, with a total investment of 800 million yuan to build a semiconductor gas R & D and production center. The project will achieve ultra-clean and high-purity special gas production, which will help relieve part of the production capacity pressure of Foshan headquarters and lay a solid foundation for the company's future development in Guangdong.
Bottom of the cycle: the year-on-year decline in domestic semiconductor sales has continued to narrow since April. The integrated circuit industry is expected to shift from active de-depot to passive de-depot, and the bottom of demand is forming. Domestic semiconductor sales fell 31% in April 2023 from a year earlier, the first year-on-year improvement since January 2021. From April to August 2023, semiconductor sales continued to narrow year-on-year-31%,-30%,-24%,-19%,-13% respectively. Domestic semiconductor sales in August were US $13 billion, which has continued to rise since February. Assuming sales remain at August levels in the coming months, downstream demand is expected to reach a year-on-year inflection point in December 2023.
Category expansion: the company's ethylsilane and some new fluorocarbon products are expected to contribute to the performance increment according to the semi-annual report of 2023, the number of some projects under research is as high as 48, including the research and development of silicon-based precursor synthesis and purification technology, high purity germanane synthesis and refilling technology, silicon-based precursor-ethysilane synthesis and purification, hexafluorobutadiene synthesis and purification and so on.
According to the Shanghai E interaction, the production line installation of the ethylsilane project has been completed on July 19. At present, in the pilot stage, the test products have been certified by some customers downstream. Once the certification is passed, it is expected to obtain the order for mass production.
According to Shanghai E interaction, on May 25, some of the company's fluorocarbon products and hydrides have been used in the advanced process of 5nm and continue to expand their coverage.
We judge that China's industrial gas industry has entered a stage of high-quality development, and M & An integration is expected to speed up according to the strategic plan mentioned in the company's 2023 semi-annual report: the overall scale of domestic gas enterprises is smaller than that of overseas gas enterprises. speed up M & An and resource integration. Focusing on the strategy of "differentiated development and international layout, to build a leading special gas company in Asia", the company will carry out a series of cross-regional mergers and acquisitions to achieve long-term goals; these mergers and acquisitions will make up for the company's deficiencies in product categories, industrial chain, region and other aspects.
Medium-and long-term logic: technical advantages, customer advantages are obvious, the extension to syngas will greatly enhance the profitability of the company is the forerunner of the localization of special gases, domestic integrated circuit manufacturers achieve more than 80% customer coverage.
The first-mover advantage is obvious: 1) Technical advantage: the company has obtained the certification of ASML and other companies, and now has the supply capacity of dozens of special gas products; 2) customer advantage: the first-mover advantage is obvious, and the customer coverage is extensive, and it is expected to extend from semiconductors to food, medical and other fields. 3) extend to syngas on the basis of advanced purification technology to enhance comprehensive profitability: Jiangxi Watt, Zigong Watt and other projects will be completed in the next 3 years, significantly increase the proportion of high gross profit syngas such as hydride and fluorocarbon; 4) overseas network advantage: the company will continue to strengthen the construction of overseas direct sales outlets, which will help to increase the gross profit margin of overseas business in the medium and long term.
Profit forecast and investment advice
It is estimated that the net profit of homing from 2023 to 2025 is 1.8,2.70 and 360 million yuan, an increase of-11%, 45% and 36% over the same period last year, corresponding to PE of 41, 28 and 21 times, respectively. Maintain a "buy" rating.
Risk hint
The price of products and raw materials fluctuates; the expansion of overseas outlets is not as expected; the progress of capacity expansion is not as expected.