Main points of investment:
The company released the third quarterly report of 2023, the performance is in line with expectations. During the reporting period, the company achieved revenue of 1.129 billion yuan (YoY-20%), net profit of 122 million yuan (YoY-35%) and non-return net profit of 113 million yuan (YoY-37%).
Among them, 23Q3 achieved a revenue of 389 million yuan (YoY-25%,QoQ+2%) in a single quarter, a net profit of 47 million yuan (YoY-31%,QoQ+36%) and a non-return net profit of 44 million yuan (YoY-34%,QoQ+48%). The performance was in line with expectations. 23Q3's sales gross profit margin is 32.10%, with month-on-month changes of + 5.01pct and + 3.85pct, net profit rate of 12.09%, and month-on-month changes of-1.00pct and + 2.95pct, respectively, and profit margin is improved. 23Q3's sales, management, R & D and financial expenses are stable, with a total expense rate of 17.42%, a month-on-month increase in 0.35pct.
Multiple measures continue to optimize gross profit margin, 23Q3 performance improved month-on-month, looking forward to a pick-up in the semiconductor cycle. During the reporting period, demand for terminal consumer electronics was sluggish, the growth rate of downstream semiconductor factories declined compared with the same period last year, and the downward cycle of the industry affected the demand for materials upstream to a certain extent, and the company's performance continued to be under pressure this year. In order to optimize the company's gross profit margin and ensure profitability, the company abandoned some low-margin products and continued to launch high-precision products such as germanane and hexafluorobutadiene. At the same time, Q3 raised the export prices of some fluorocarbon products. The effect of multiple measures is obvious. 23Q3's sales gross profit margin is 32.10%, which is + 5.01pct and + 3.85pct respectively. In the follow-up, with the pick-up of electronic terminal demand, the operating rate of customers such as the company's downstream wafer factories is expected to increase, the company's new products and new production capacity continue to expand, gross profit margin is constantly optimized, and the company's performance is expected to improve quarter by quarter.
Breakthroughs have been made in the field of high-end applications, the layout of new projects has been promoted in an orderly manner, and the company is optimistic about its continued growth. Companies adhere to a variety of special gas development strategy, to high-end products as the main direction, downstream has basically covered the domestic 12-inch wafer factories, more than 15 products have supplied 14nm advanced technology, more than 10 products have been supplied to 7nm advanced technology, 2 products into 5nm advanced technology, independent research and development of the whole industry chain product germane has been in the Samsung 5nm process production line.
In terms of project construction, prior to the completion of the capital construction of Jiangxi IPO investment project and the orderly release of production capacity, in March 2023, the company completed the issuance of convertible bonds and built an annual semiconductor material project with an annual production capacity of 1764 tons in Jiujiang, Jiangxi Province; in addition, the company has project construction plans in Zigong, Sichuan and Rudong, Jiangsu, and the regional strategic layout has been continuously improved. On October 26, 2023, the company announced that it planned to sign the "Project Investment Agreement of Watt Semiconductor Materials Research and Development headquarters" with the people's Government of Triangle Town, Zhongshan City, Guangdong Province, and planned to invest 800 million yuan to build a semiconductor gas R & D and production center. among them, the project fixed assets investment (excluding land price) 396 million yuan, the implementation of this project will help to relieve some of the production pressure of Foshan headquarters. At the same time, lay a solid foundation for the future development of the company in Guangdong. By the end of the three quarters of 2023, the company had 292 million yuan under construction, an increase of 98 million yuan over the mid-2023 report.
Investment analysis opinion: temporarily maintain the company's 2023-2025 homing net profit forecast of 2.00,2.87, 386 million yuan, the current market value corresponding to PE is 38,26,20X, maintain the "overweight" rating.
Risk tips: 1) downstream demand is lower than expected; 2) project progress and product introduction are not as expected; 3) raw material prices have risen sharply.