Matters:
On October 30, 2023, the company released its report for the third quarter of 2023:
1) 2023Q1-Q3: The company achieved operating income of 682 million yuan, -22.14%; gross profit ratio of 37.82%, year-on-year -8.28pct; net profit attributed/withheld from mother to mother of 11/ 085 million yuan, -49.88%/-56.03% year-on-year;? 2) 2023Q3: The company achieved operating income of 200 million yuan, -21.65%/-22.66%; gross profit ratio of 35.86%, y-1.51pct/-4.85pct; net profit margin of 34 million yuan, y-14.22%/-29.11%; net profit of 0.34 million yuan, year-over/month-on-month +14.22%/-29.11%; net profit after deduction of 26 million yuan, year-over-year +18.81%/-32.88%.
Commentary:
The company's short-term performance is under pressure, and the recovery of the industry cycle combined with the expansion of new business is expected to drive performance to resume growth. Affected by the cyclical nature of the industry, the company's short-term performance was under pressure. 2023Q3 achieved operating income of 200 million yuan, -21.65%/-22.66% yoy, and net profit of 34 million yuan, +14.22%/-29.11% yoy.
The de-inventory stage for pan-consumer chips such as mobile phones and security devices has been completed one after another. As downstream demand picks up, the company's capacity utilization rate is expected to increase. Considering the asset-heavy nature of the closed testing industry, we believe that the elasticity of the company's performance is expected to continue to be unleashed under the scale effect. At the same time, the company continues to make efforts to open up growth space in new fields such as automotive camera packaging and micro optical device manufacturing, and future performance is expected to return to a high growth path.
Demand is recovering, and the mobile phone business is expected to pick up a steady recovery, opening up room for growth in the automotive CIS. Demand for pan-consumer chips related to mobile phones, security, etc. is gradually picking up. The company is expected to benefit from the recovery in downstream demand and related businesses to resume growth. The company's technology has a comparative advantage in the field of medium and low pixel product packaging. As wafer-level packaging technology continues to break through the pixel limit, it is expected to open up space for the company's future growth. The trend of automotive intelligence is accelerating, and demand for automotive CIS continues to grow significantly. The company focuses on the automotive electronics sector, built the world's first mass production line for 12-inch wafer-grade silicon through-hole packaging technology for automotive-grade products, and cooperated with high-quality customers such as Howei to maintain industry leadership in automotive CIS mass production, and is expected to benefit from the explosion of downstream demand 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 suggestions: As a leader in the CIS wafer-level packaging segment, the company has deep technology accumulation, high-quality customer structure, and smooth new business development, and 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 2.05/35/504 million yuan to 1.67/3.03/422 million yuan, corresponding to EPS of 0.26/0.46/0.65 yuan. Considering the company's historical PE valuation range and smooth new business development, 55 times PE was given in 2024, with a target price of 25.5 yuan/share, maintaining a “strong push” 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.