Key points of investment
Event: On February 23, 2024, the company announced the 2023 performance report.
Net profit to mother rose 41% in 2023. In 2023, the company achieved operating income of 1,504 billion yuan, an increase of 22.5%, net profit to mother of 173 million yuan, an increase of 40.7%, and net profit after deducting non-return to mother of 151 million yuan, an increase of 33.0%, in line with market expectations. In the fourth quarter of 2023, the company achieved operating income of 432 million yuan, an increase of 11.0%, and realized net profit of 44 million yuan, an increase of 19.3%, and realized net profit without deduction of 43 million yuan, an increase of 44.0%. The main companies during the reporting period: 1) strengthened operation management to continuously reduce costs and increase efficiency; 2) seizing market opportunities and actively exploring overseas markets; 3) net profit increased significantly due to comprehensive factors such as increased wealth management income.
Net interest rate/net interest rate without return to mother increased by 1.5 pct/0.8 pct. In 2023, the company's net interest rate/net interest rate not attributable to mother was 11.5%/10.0%, an increase of 1.5pct/0.8pct. The gross margin of the company's consumables replacement business and overseas projects is higher than the overall gross margin. We expect the company's share of consumables and overseas projects to continue to increase.
Domestic leader in semiconductor cleanroom filtration equipment, optimized domestic replacement pattern. The company has a market share of 30% in the domestic semiconductor cleanroom field. In September 2023, the company's competitor Yuyuan Environmental was sold to the foreign-owned MANN+HUMMEL Group. Under the trend of domestic substitution in the semiconductor supply chain, the company's position as a leading domestic equipment leader has been strengthened, and the domestic substitution pattern continues to be optimized.
The share of consumables has increased, and the quality of profit has improved. In the first three quarters of 2023, the company's replacement consumables accounted for 28% of revenue. The company expects a gross profit margin of 30% to 40% for consumables and 15% to 20% for equipment. As new orders continue to be converted into consumables orders, an increase in the share of consumables will drive an increase in profit margins. Furthermore, demand for consumables has stabilized, and the certainty of the company's revenue and profit has increased.
A leading semiconductor company overseas that has gone overseas. The company is actively expanding overseas semiconductor markets. Its products have passed many international system certifications and obtained product certifications in many countries and regions. It is a qualified supplier for international semiconductor manufacturers such as STMicroelectronics, Micron, AMD, Western Digital, and Texas Instruments. Overseas accounts for 15% to 20% of the company's new orders in 2023. Overseas gross margin is higher than domestic, and the market space is broad.
Profit forecast and investment rating: Leading supplier of clean room equipment, full on-hand orders, capacity expansion & scale effects help the company accelerate growth. We maintain the 2023-2025 net profit of 1.7/2.5/320 million yuan, corresponding growth rates of 40%/45%/29%, respectively. The current market value corresponds to 2023-2025 PE26/18/14x (2024/2/23), and maintains a “buy” rating.
Risk warning: Production expansion progress falls short of expectations, clean room downstream policy risks, technology iteration risks