Description of the event
In the first three quarters, MayAir Technology achieved revenue of 1,072 million yuan, a year-on-year increase of 27.89%, net profit of 129 million yuan, an increase of 49.97% over the previous year; Q3 achieved operating income of 420 million yuan, an increase of 54.79% year-on-year, and net profit of 52 million yuan, an increase of 131.07% year-on-year.
Incident comments
The acceleration of downstream capital expenditure combined with the increase in sales of consumables has led to a steady increase in revenue. Q3 The main reasons for the company's good revenue growth rate are estimated to be: 1) the semiconductor industry is affected by technological competition between China and the US, and there are many new orders brought about by localized substitution; 2) the domestic semiconductor industry continues to make breakthroughs, driving the trend of capital expenditure of domestic enterprises gradually bottoming out; 3) As the company's customer coverage continues to increase, consumables sales continue to increase, leading to performance improvements. Furthermore, in the context of carbon neutrality and carbon peaks, national policies are gradually tightening the control of air pollutants such as oil mist, dust, and VOCs generated during industrial production and processing. The company has developed a range of products to meet downstream demand, and customers have also gradually expanded to new energy industries such as Guoxuan Hi-Tech and Dangsheng Technology, forming revenue growth points. In addition, the impact of non-recurring profit and loss in the first three quarters, such as corporate government subsidies and entrustment investment income, further strengthened the company's performance (other income and net investment income for the first three quarters were RMB 7.98 million and RMB 8.65 million, respectively, compared to RMB 4.58 million and RMB 2.1 million for the full year of last year).
The consolidated gross margin declined slightly in the first three quarters, and the financial expense ratio declined markedly. The company's comprehensive gross margin for the first three quarters was 28.3%, down 1.0pct from the previous year. The estimated reasons are: 1) the gradual increase in the share of consumables in the product structure led to a recovery in comprehensive gross margin, but since the current share of consumables is still low, the impact of this factor is relatively weak; 2) the effects of cost reduction driven by the localization of the company's raw materials glass fiber and PTFE are still not apparent; 3) downstream enterprises have high bargaining power. Intense competition has led to a decline in consumables gross margin. In the first three quarters, the company's annual expense ratio decreased by 0.98 pct to 15.63% year on year. Among them, the sales expense ratio decreased by 0.27pct to 6.56%, the management and R&D expenses rate increased by 0.20 pct to 8.78%, and the financial expenses rate decreased by 0.91pct to 0.29%, mainly because the company had sufficient capital after the IPO.
Cash flow has improved, and there is still room for improvement in the future. The company's revenue ratio for the first three quarters was 90.0%, an increase of 5.1 pct over the previous year.
At the end of September, the company's accounts receivable and notes receivable increased by $82 million to $758 million compared to the end of last year. At the same time, accounts payable and notes payable decreased by $17 million. This year, the company's consumables revenue is expected to account for close to 30%. In the future, as the overseas share of the revenue structure and the share of consumables further increase, the company's cash flow situation will continue to improve.
The expansion of production capacity will drive continued improvement in future performance. As trade friction between China and the US in the high-tech industry intensifies, the trend of localization and substitution in the semiconductor industry is gradually accelerating. Furthermore, the trend of the semiconductor industry moving to Southeast Asia is becoming more obvious. The company's current capacity utilization rate has continued to be saturated. As fund-raising projects are gradually put into production in batches, it is expected that the company's production and sales volume will increase steadily, thus driving up the company's revenue and profit. Furthermore, Zaisheng Technology announced in July that it intends to sell 70% of its subsidiary Yuyuan Environment to MANN+HUMMEL Singapore Holdings (becoming a foreign-funded company). The competitive landscape in the domestic market may improve after the transaction is completed in the future. MayAir Technology's net profit for 2023-2024 is estimated to be 180 million yuan and 240 million yuan respectively, up 45.72% and 32.72% year on year. The current stock prices corresponding to PE in 2023 and 2024 are 27x and 20x respectively, giving a “buy” rating.
Risk warning
1. Fund-raising projects fall short of expected risks;
2. Overseas expansion falls short of anticipated risks.