Fuchuang Precision announced its three-quarter report for 2023. The company's revenue for the third quarter of 2023 increased month-on-month in terms of revenue and profit: the company achieved operating income of 561 million yuan in the third quarter of 2023, an increase of 35.37% over the same period in 2022, and a 15.2% increase over the same period in 2023 of 487 million yuan in Q2. Q3 in 2023 achieved net profit of 36.33 million yuan, a decrease of 42.13% over the same period in 2022. Net profit after deduction was 11.87 million yuan, down 76.29% from the same period in 2022. The company achieved a total operating income of 1,390 million yuan in the first three quarters of 2023, an increase of 37.28% over the same period in 2022; net profit for the first three quarters of 2023 was 132 million yuan, a year-on-year decrease of 19.15%, and net profit after deduction of 37.06 million yuan, a year-on-year decrease of 70.18%.
The increase in the company's operating income mainly benefited from the increase in demand in the domestic semiconductor market and the demand for localized components. The company's operating income continued to grow. The main reason for the decline in the company's profit is: 1. The company's product structure has changed, and the share of revenue of module products with relatively high raw material costs and relatively low gross profit has increased dramatically. Revenue growth for component products that use a lot of machinery and equipment fell short of expectations. The pace of production of machinery and equipment invested by the company in advance was mismatched with industry prosperity, and the scale effect was not yet reflected; 2. The company reserves talents for many factories and carried out management improvements, leading to an increase in management and sales expenses; 3. The company strengthened research and development of new technologies and products, which increased R&D expenses during the reporting period; 4. Non-recurring profit and loss increased during the reporting period. The company's core products have a wide market space. The global market size of the main products, or the semiconductor equipment precision parts market involving the company over 30 billion US dollars, is conservatively estimated to exceed 20% of the global semiconductor equipment market. The company is currently involved in the global market size of semiconductor equipment precision components of about US$16 billion in 2020, accounting for 22% of the global semiconductor equipment market in that year. According to SEMI's forecast, the semiconductor equipment market will reach 140 billion US dollars in 2030. Assuming that the ratio does not change, the global market size of the company's main products is expected to exceed 30 billion US dollars in 2030.
The company has accumulated deep technology, and ongoing research on ongoing projects
Combining the scientific research results accumulated over many years of technology research and development and project implementation experience, the company has leading technical capabilities in key aspects of precision components for semiconductor equipment such as precision machinery manufacturing, special surface treatment processes, and welding. As of the three-quarter report of 2023, the company's R&D investment increased significantly, with a year-on-year increase of 75.73% over the same period in 2022, mainly due to the company's increased investment in R&D of new technologies and products during the reporting period and from the beginning of the year to the end of the reporting period, leading to an increase in R&D materials, personnel and remuneration.
Investment advice
We expect the company's revenue for 2023-2025 to be 2,02/2,939 billion/3,959 billion yuan, respectively. Net profit of net income was 212 million yuan/310 million/481 million yuan, respectively, and EPS per share was 1.02 yuan/1.49 yuan/2.30 yuan. Corresponding PE is 81/55/35 times, respectively. Maintain the “Overweight” rating.
Risk warning
The progress of fab factory expansion falls short of expectations, long sales cycles, untimely repayment, and technology iteration falls short of expectations