Incidents:
The company released its 2023 annual report on March 25, 2024, and achieved revenue of 712 million yuan in 2023, +7.51% year over year; net profit to mother of 174 million yuan, -7.57% year over year. Among them, 2023Q4 had quarterly revenue of 210 million yuan, +15.33% YoY; net profit to mother was 49 million yuan, -13.71% YoY.
Opinions:
The demand for functional fillers is high-end, and the company's growth value is outstanding. Driven by demand in downstream fields such as 5G, AI, HPC, HBM, and new energy vehicles, the field of high-end new materials is rapidly developing. The company's main low-loss, high-heat dissipation silicon powder fillers will continue to meet the higher performance requirements of powder materials in application fields such as high-frequency high-speed substrates, IC carrier boards, high-end chip packaging, heterogeneous integrated advanced packaging, and thermal interface materials.
Product structure upgrades drive performance growth, and scale growth can be expected. In 2023, the company's revenue reached the highest since listing. By product: square inorganic powder/spherical inorganic powder/other businesses (mainly alumina powder) achieved revenue of 233 million yuan/369 million yuan/109 million yuan respectively, year-on-year difference
+0.61%/+4.19%/+45.09%. The gross margins of the company's angular inorganic powder/spherical inorganic powder/other businesses reached 32.75%/46.22%/29.48% respectively. The spherical inorganic powder business grew steadily, with a gross margin of +3.17%. Along with the recovery in downstream demand and the increase in the company's market share, high-barrier spherical powder is expected to grow rapidly and will be the main support for performance.
Promote technological innovation and upgrading, and lead the strengthening of core competitiveness. During the reporting period, the year-on-year decline in the company's net profit was mainly affected by the increase in R&D expenses. The company invested a total of 47 million yuan in R&D, an increase of 23.13% over the previous year. R&D investment accounted for 6.66% of revenue, and obtained 13 intellectual property rights, including 12 invention patents and 1 utility model patent.
During the reporting period, projects such as UF's development of submicron spherical alumina and spherical silicon dioxide development projects for wafer-grade chip packaging have entered the engineering stage; projects such as spherical silicon dioxide development projects for ultra-low loss high-speed substrates have entered the industrialization stage; projects to improve the fluidity of spherical silicon powder for epoxy encapsulants and the development of spherical silicon powder for advanced millimeter-wave radars have been industrialized and closed.
Profit forecast and investment rating: Looking ahead to 2024, as the company's product structure continues to be transformed and upgraded, the share of high-end products increases, domestic substitution accelerates, and gross margin is quite resilient. The company's net profit for 2024-2026 is estimated to be 2.04/26/305 million yuan, respectively, and the corresponding 2024-2026 PE is 39.17/29.99/26.13 times, respectively. First coverage, giving a “buy” rating.
Risk warning: Increased market competition, downstream demand falls short of expectations, production capacity investment progress falls short of expectations, new business expansion falls short of expectations, and large fluctuations in natural gas prices are putting pressure on costs. GEM and Science Innovation Board stocks have a risk rating of R4 and can only be used by customers who meet the Company's proper management requirements.