Introduction to this report:
The company's 2023Q4 performance is in line with expectations, and the company will benefit from the optimization of the production capacity structure. At the same time, benefiting from the company's layout of high-end materials such as advanced packaging, computing power requirements may drive rapid growth in demand for related high-end packaging products.
Key points of investment:
Maintain an “Overweight” rating. The price of natural gas rose sharply in 23Q4. EPS for 23-25 was lowered to 0.95/1.38/1.73 yuan (originally 1.09/1.46/1.91 yuan), the reference sector valuation was given, the 24-year PE 40.89X was given, and the target price was raised to 56.43 yuan, maintaining the “gain” rating.
The company's 23Q4 results were in line with expectations. The company achieved revenue of 712 million yuan in 2023, +7.51% year-on-year, achieving net profit of 174 million yuan, or -7.57%; of these, 23Q4 achieved revenue of 210 million yuan, +15.33%, and +2.08% month-on-month, achieving net profit of 49 million yuan, -13.71% year-on-year and -5.09% month-on-month. We believe that the continued year-on-year increase in the company's revenue is mainly due to the continued commissioning of new production capacity, but the net profit level was affected by natural gas prices, and Q4 performance declined. According to iFind, the average price of LNG in the 23Q4 market was 5088 yuan/ton, +28.61% month-on-month.
With the explosion of advanced packaging, the recovery of consumer electronics, the wave of AI, and the acceleration of high-end material deployment, the company's performance is expected to maintain rapid growth in 24 years. According to Yole's forecast, the global advanced packaging CAGR will be 10.6% in 2028, reaching US$78.6 billion by 2028. According to Wind, China's 23Q4 smartphone production was 363 million units, +13.74% year over month, +24.31% month on month; integrated circuit production was 10.9 billion units, +31.17% year on month, +10.98% month on month; total computer output was 94 million units, -12.17% year on year, -0.09% month on month. The company optimized the existing production capacity structure by designing an electron-grade functional powder material project for circuits with a production capacity of 252,000 tons. At the same time, the company already supplies the low α spherical silicon and low α spherical aluminum products needed by HBM in batches. The CAGR of the company's net profit to mother for 23-25 is expected to be close to 35%.
Catalysts: Consumer electronics recovery, accelerated deployment of high-end packaging materials, and bursting demand for computing power.
Risk warning: Market development falls short of expectations, and natural gas prices have risen.