3Q23 performance is below our and market expectations.
Fortune released the third quarter of 2023 report: 3Q23 single-quarter revenue of 561 million yuan, QoQ+15%,YoY+35%; return net profit of 36 million yuan, QoQ-35%,YoY-42%; deduction of non-return net profit of 12 million yuan, QoQ-45%,YoY-76%. Lower than we and the market expected. It is mainly caused by the slowdown of shipments of downstream equipment factory and the pressure on the equipment production rate of the company.
Trend of development
Benefiting from the trend of localization of semiconductor equipment components, Fortune Precision continues to grow in revenue in a single quarter.
However, we believe that the shipment growth of 2H23 domestic equipment manufacturers may be lower than originally expected, resulting in the company's actual parts delivery is not as expected, and the company's revenue growth in a single quarter is lower than expected.
3Q23's single-quarter gross profit is 26.40% Magi QoQ 0.01pct YoYPay 6.44pct. 3Q23 single-quarter gross profit margin and 2Q23 approach, and lower than the same period last year level, on the one hand, reflects the company from domestic customers side gross profit margin is relatively low in the proportion of module products, on the other hand reflects that the machine and equipment occupied more parts product revenue growth than expected, the company's advance investment in machinery and equipment production rhythm and industry prosperity mismatch, scale effect has not been reflected.
The single-quarter sales / management / R & D expense rate of 3Q23 is 1.68% 9.97%, 10.22%, 0.25, 0.90pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct, 2.13pct,
3Q23's quarterly net profit rate is about 6%. In addition to gross profit margin and expense rate, 12.49 million yuan of non-operating expenses in the current quarter is also affected by 2pct. We can see that at the end of 3Q23, there are about 150 million yuan in consolidation and an increase in fixed assets of about 300 million yuan. We think that if the company has new machinery and equipment put into production, on the one hand, the dismissal of new capacity will ensure the subsequent revenue growth of the company, but on the other hand, the climbing stage of production capacity may affect the gross profit margin.
Profit forecast and valuation
Taking into account the 2H23 domestic equipment factory parts demand growth is not as expected and overseas semiconductor equipment manufacturers' current orders have not shown a significant pick-up trend, we lowered the company's 2023 2024 revenue forecast of 9% to 2.845 billion yuan. The company's current share price corresponds to the 2024 57.5xP/E. The examination rate is under pressure on the company's short-term profit margin, lowering the company's 2023max 2024 net profit forecast of 31% to 284 million yuan. The company is valued by the forward Phammer E valuation method, the performance forecast for 2026 is lowered and the valuation multiple is lowered (down to 30x), the company's target price is lowered by 29% to 82.04 yuan, there is 5% upside space, and the rating of the outperforming industry remains unchanged.
Risk
The market competition risk, the semiconductor cycle influence, the trade friction intensifies.