Incident Overview
On the evening of October 24, the company disclosed its report for the third quarter of 2023. 23Q1-Q3 achieved revenue and net profit of 483/05 billion yuan (+11.32%/+16.30% year-on-year), respectively, and 23Q3 realized revenue and net profit of 1.69/028 billion yuan respectively (+1.89%/+43.32% year-on-year).
Analysis and judgment
The company is a leading semiconductor scribing machine company, and orders have risen rapidly year over year. The company is one of the top three semiconductor cutting and dicing equipment companies in the world. It has the technology and experience accumulated by LP and ADT over many years, and continues to promote the localization of semiconductor dicers in Zhengzhou based on these advantages. Although the current de-inventory cycle in the semiconductor industry continues, the company's 23Q1-Q3 domestic semiconductor dicer orders continue to grow (mainly 8230/6110 machines used for cutting compound semiconductor materials are also growing). In terms of production capacity, the first phase of production in the Zhengzhou Airport Plant has been normalized, with an annual production capacity of 500 units by the end of 2023; furthermore, the company started construction of the second phase of the Airport Area Plant on 23H2, with a construction area twice that of the first phase of the project. We believe that as the industry gradually recovers and production capacity continues to expand, the domestic replacement process for the company's dicer is expected to continue to advance.
Simultaneous horizontal/vertical layout, advancing towards platform-based development. The company has now deployed thinning grinders (in the verification stage, verification results meet design requirements) and laser cutting and dicing machines (under development, expected to be launched in 2024), which are expected to form a synergy with existing equipment. At the same time, the company focuses on domestic replacement of upstream core components and consumables: the company's localized cutting air spindles have entered the mass production stage, which will be applied to its own products and may be sold abroad; in addition, the company has further carried out research and development work on core components such as air rails/rotating workbenches/high-speed motors; in terms of consumables, the company is also localizing soft knives and hard knives, and is expected to achieve small-batch production of localized blades by the end of 2023. We believe that self-supply of core components and consumables is expected to improve the performance and cost performance of the company's products, while also providing a safer supply system for the company's products.
Production safety and energy saving monitoring businesses are expected to grow steadily, and intelligent drilling rigs may become a new driving force for development. The company has been deeply involved in the coal mine safety production monitoring business for many years and is a certified development partner of Huawei. We believe that intelligent mine construction, reducing personnel and increasing efficiency in coal mines to ensure safety are the future development trends of the industry, and the company is expected to follow the steady growth of the industry. At the same time, the company's new product, an intelligent drilling rig, has also formed an official order, which is expected to inject new growth impetus into this business in the future.
Investment advice
Maintain a “buy” rating. We adjusted the company's net profit for 2023-2025 to be 1.03/133/177 million yuan, respectively. The year-on-year growth rate was +58.2%/+28.3%/+33.4%, respectively, the corresponding EPS was 0.29/0.38/0.50 yuan, and the corresponding PE valuation was 90/70/53 times, respectively.
Risk warning
R&D progress falls short of expectations, demand for semiconductor equipment falls short of expectations, and there is a risk of international trade friction.