Incidents:
The company released its 2023 performance report. In 2023, it achieved operating income of 327 million yuan, a year-on-year increase of 2.78%, net profit to mother of 67 million yuan, a year-on-year decrease of 16.46%, and net profit after deducting non-return to mother of 51 million yuan, a year-on-year decrease of 20.30%. Among them, 2023Q4 achieved revenue of 119 million yuan, a year-on-year increase of 49.52%, net profit to mother of 0.23 million yuan, an increase of 45.99% year-on-year, and net profit after deducting non-return to mother of 0.19 million yuan, an increase of 44.99% over the previous year.
Comment:
Demand for terminals needs to pick up, and performance has improved month-on-month. The company's revenue side grew moderately in 2023, mainly because the global economy recovered less strongly during the reporting period, consumer confidence was average, and the company's operating income was basically the same as the previous year, while the slight decline in the performance side was due to a decrease in the company's financial expenses exchange income and government subsidies during the reporting period compared to the same period last year. However, on a quarterly basis, the company's performance improved markedly in the fourth quarter, with revenue +35% month-on-month, net profit to mother +29% month-on-month, and net profit excluding non-return to mother +38% month-on-month, indicating that the company's overall business gradually picked up in the second half of the year.
A leader in FPC testing equipment, downstream demand is gradually picking up. The company has been deeply involved in FPC testing for many years and has established cooperative relationships with world-renowned companies in the downstream FPC field. According to 2020 industry data, 8 of the top ten global FPC companies are all company customers and have become suppliers to Apple, Google and other companies. As the consumer electronics industry gradually picks up and new products continue to be iterated, downstream FPC applications will continue to increase. As a leader in FPC testing, the company will also fully benefit from the recovery in downstream demand and growth in new fields.
Actively expand new businesses, the potential is endless. The company is actively developing new businesses using FPC testing as the foundation. Currently, it has made phased progress in the fields of semiconductor packaging and testing equipment (SIP chip testing and MEMS sensor testing), semiconductor components, and automotive FPC. Among them, with the 0-1 outbreak of the humanoid robot industry, demand for sensors and MEMS sensor testing from downstream manufacturers will also increase. We believe that the company has been working in the field of MEMS sensor testing equipment for a long time and has made good progress. It is expected that the humanoid robot field will be actively opened up in the future to contribute additional volume to the company.
Profit forecast: As an excellent domestic FPC testing equipment company, the company relies on years of deep technology accumulation, and is expected to develop more downstream fields and further enhance its market position in the future. We expect the company to achieve net profit of 0.67/ 1.21/ 158 million yuan in 2023-2025, corresponding PE 33/18/14 times. The 2024 profit was estimated at 25 times PE, and the target price was 20.9 yuan. It was covered for the first time, and a “buy” rating was given.
Risk warning: Downstream demand falls short of expectations, profit forecasts and valuation judgments fall short of expectations.