Incident: On January 16, 2024, the company released its 2023 performance forecast. It is expected to achieve net profit of 242-282 million yuan for the whole year, +45.90%-70.01% year-on-year; after deducting non-net profit of 232-272 million yuan, +57.44%-84.58% year-on-year.
Full year results are in line with expectations. In terms of median value, the company is expected to achieve net profit of 262 million yuan in 2023, +57.96% year on year; after deducting non-net profit of 255 million yuan, +71.01% year over year, the performance is in line with expectations. On a quarterly basis (in terms of median value), 23Q4 is expected to achieve net profit of 90 million yuan, +456.51% year over year, and +24.12% month on month; after deducting non-net profit of 81 million yuan, +1607.24% year on year, and +12.60% month on month.
The MLCC industry cycle rebounded steadily in 22Q4. The MLCC industry entered a downward cycle in 21Q3, and inventory levels continued to rise. MLCC manufacturers instead adopted careful procurement strategies to focus on inventory removal. By the time the 22Q3 industry bottomed out at an accelerated pace, the operating rate of the original factory had reached the bottom of the cycle, the industry's inventory level gradually fell back to a healthy level, and MLCC manufacturers' indicators were repaired quarterly. As terminal consumer demand picks up, downstream customer demand for inventory replenishment increases, and the company releases additional production capacity, the company's carrier tape business is expected to recover quarterly.
Lay out the high-end release film market and create a second growth curve. Release film is an essential consumable material for the MLCC cast molding process, accounting for about 10-20% of the MLCC cost. According to our estimates, the global MLCC release film market in 2021 was about 14.526 billion yuan. Release films have high requirements for base films, release agents, processing technology, etc., so they have high technical barriers. Currently, the high-end market is mainly dominated by Japanese, South Korean, and American companies.
The company successfully developed the release film in 2015 and put into production in 2017. In order to achieve independent supply of raw materials and strengthen the high-end release film market, the company independently develops release film base films to integrate the release film industry chain. Currently, the company's high-end release film products are being tested and verified in small batches by Japanese and Korean manufacturers. With subsequent small-batch trials, the company's high-end release film is expected to be rapidly released, opening up a second growth curve.
Profit forecast: The company's revenue for 2023-25 is estimated to be RMB 16.49, 24.39, and RMB 3.145 billion; net profit to mother is RMB 2.60, 351, and RMB 516 million respectively, giving it a “buy” rating.
Risk warning: Downstream demand recovery falls short of expectations; risk of new business expansion falling short of expectations; risk of release of new production capacity falling short of expectations; risk of price fluctuations of major raw materials.