Revenue is expected to increase 58%-63% year over year in 2023, and net profit to mother will turn a year-on-year loss into a profit. The company announced its 2023 performance forecast. It is expected to achieve revenue of 1,242-1,281 billion yuan (YoY +58% to +63%); net profit due to mother is expected to be 0.88—106 million yuan, turning a loss into profit from a loss of 73 million yuan in the same period of the previous year; net profit without return to mother is expected to be 0-11.3955 million yuan, turning a loss into a profit compared to a loss of 228 million yuan in the same period last year.
The median revenue for 4Q23 is expected to increase by 52.53% year on year, and net profit to mother increased significantly compared to the same period last year. The company's 4Q23 median revenue is estimated at 352 million yuan (YoY +52.53%, QoQ -31.36%, of which 3Q23 has a large amount of semiconductor equipment sales revenue); estimated median net profit of 84.9477 million yuan (YoY turned a loss of -74.968 million yuan in 4Q22 into profit, QoQ +113.99%); estimated median net profit of 556.744 million yuan after deducting YoY's loss from 4Q22's -137 million yuan to profit, QoQ +364.37%.
The company focuses on developing the main business MEMS, with full orders and strong production and sales. The company is the world's largest pure MEMS wafer foundry. It has outstanding and leading global competitive advantages in process development and wafer manufacturing. It has a team of top experts and engineers in the industry, and is simultaneously expanding new 8 inch/12 inch production capacity at home and abroad, thus better grasping market opportunities in downstream communications, biomedicine, industrial vehicles, consumer electronics, etc., so orders are relatively full, and production and sales are strong.
The company's Swedish production line readjusted its production expansion plan, and the Beijing production line entered a phase of climbing capacity. After the original overseas production expansion plan was thwarted, the company's Swedish MEMS production line (FAB1&2) completed the acquisition of the semiconductor industrial park where the production line is located in the first half of 2023, and revenue and profitability recovered significantly. After years of accumulation, the company's Beijing MEMS production line (FAB3) entered a phase of rising production capacity, and revenue increased dramatically, and losses narrowed while objectively facing depreciation and amortization pressure, factory operation and personnel costs.
The company added semiconductor equipment sales business to generate part of the revenue and profit. Due to the complex international political and economic environment in recent years, the company has increased strategic procurement of several batches of semiconductor equipment from overseas. While meeting the medium- and long-term needs of the Group's production lines itself, it has added semiconductor equipment sales business in line with the needs of other domestic semiconductor manufacturers, contributing a certain amount of revenue and profit to the Group.
Investment advice: Raise profit expectations and maintain a “buy” rating. Considering the company's leading position in the world in Sweden and the large-scale production advantages of the Beijing production line, we believe that the company's MEMS production capacity continues to expand, capacity utilization is expected to increase, and there is plenty of room for improvement in gross margin. At the same time, in line with the company's mass production progress of new products such as BAW filters and lidar MEMS galvanometers, we have raised the company's performance expectations. We expect revenue of 2023-2025 to 12.63/18.93/2.69 billion yuan (previous value of 1,322/16.88/2,072 billion yuan), net profit of 0.97/2.74 billion yuan /408 million yuan (previous value 0.37/1.27/206 million yuan). The corresponding PB of the current stock price is 2.76/2.62/2.43, respectively, maintaining the “buy” rating.
Risk warning: Production capacity release falls short of expectations; customer verification falls short of expectations; downstream demand falls short of expectations.