Introduction to this report:
The company's 2023 performance is in line with expectations, and the company will benefit from the recovery in semiconductor demand and the optimization of its own production capacity structure.
At the same time, demand for computing power may drive rapid growth in demand for the company's related high-end packaging products.
Key points of investment:
Maintain an “Overweight” rating. Affected by a slight decline in the company's product prices, the 24-25 EPS was lowered to 1.26/1.54 yuan (originally 1.38/1.73 yuan), and the 2026 EPS was added to 1.75 yuan. Reference sector valuation. Considering the scarcity of the company's high-end products, PE 44.79X was given for 24 years, maintaining the target price of 56.43 yuan, and maintaining the “gain” rating.
The company's 23-year 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, -7.57% year-on-year, and gross sales margin of 39.24% +0.04%; of these, 23Q4 achieved revenue of 210 million yuan, +15.33% year-on-year, and +2.08% month-on-month, achieving net profit to mother of 49 million yuan, -13.71% year-on-year and -5.09% month-on-month. The continued year-on-year increase in the company's revenue was mainly due to the recovery in downstream demand and the continued commissioning of the company's high-end spherical silicon production capacity. The company's gross margin remained stable, but performance declined due to cost ratios, etc.
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 invested in the construction of a 252,000 ton electronic-grade functional powder material project for circuits to optimize the existing production capacity structure. At the same time, HBM needs high-end spherical silicon and aluminum products, and the company already supplies them in batches.
Catalysts: Consumer electronics recovery, accelerated deployment of advanced domestic packaging, and bursting demand for computing power.
Risk warning: Market development falls short of expectations, and natural gas prices have risen.