The company achieved a net profit of 6.97 million yuan to the mother in '23, and the company achieved revenue of 672 million yuan (yoy +25.2%) in '23; net profit to mother of 6.97 million yuan (yoy +111.2%), turning a loss into a profit. We adjusted the production and sales volume for 24-25 based on actual production and sales volume of the product in '23, and consider cost control. The company's net profit for 24-26 is estimated to be 0.28/0.48/0.66 million yuan (previous value: 0.33/0.38/- billion yuan). Using the segmented valuation method, the company's PB hub for the past 10 years has given PB5X to the germanium resource business; considering that germanium components and semiconductor material assets are light, the company estimated the market value of germanium resources at about 7.217 billion yuan using BPS 2.21 yuan for 24 years. The 24-year net profit of germanium components and semiconductor materials was 0.21/0.07 billion yuan. According to comparable company Wind's average expectations, PE (24E) was given 35/34X, corresponding to a market capitalization of 978 million yuan, a total market value of 8.195 billion yuan, and a target price of 12.55 yuan (previous value of 13.76 yuan), maintaining an increase in holdings rating.
The volume and price of major products rose sharply in 23 years+cost control was effective. The company turned a loss into profit in 2023. The increase in the company's revenue was greater than the increase in operating costs, and it obtained 5407.00 units/set. 5,621 lenses and optical systems (YOY +116%) and 310,000 photovoltaic grade germanium products (YOY +53%), mainly due to the resumption of procurement plans by some customers. 29 tons of fiber-grade germanium products (YOY +1%). In addition, the company's sales volume of compound semiconductor materials declined, mainly due to the downstream optical communication market and data center sales falling short of expectations. In addition, the company's expense control was effective, and the cost rate fell 7.65pct year-on-year to 22.10% during the period.
The company has a complete industrial chain
On the resource side, the company owns germanium mines. From 2010 to 2023, it consumed about 284 tons of metal resources in its own mines. The company's current material-grade germanium products are mainly germanium ingots (germanium metal) and germanium dioxide; in terms of deep processing, photovoltaic grade germanium products are mainly solar germanium wafers, infrared germanium products are mainly infrared-grade germanium single crystals and blanks (optical elements), germanium lenses, infrared thermal cameras, and optical systems. Fiber-grade germanium products are germanium tetrachloride for optical fibers, and compound semiconductor materials are mainly gallium arsenide wafers and indium phosphide wafers. The company's products are mainly used in fields including infrared optoelectronics, solar cells, optical fiber communication, light-emitting diodes, vertical cavity surface-emitting lasers (VCSELs), high-power lasers, optical communication lasers, and detectors.
The company actively lays out Kunming Yungermanium Hi-Tech Co., Ltd., a subsidiary of high-tech industry companies such as semiconductors and aerospace solar photovoltaic cells, etc., as key specialized, and new “little giant” enterprises recognized by the Ministry of Industry and Information Technology. The company currently has a large production capacity of compound semiconductor materials, including 800,000 gallium arsenide wafers per year and 150,000 indium phosphide wafers; the main downstream are optical communications and data centers. In addition, the company has a production capacity of 500,000 germanium wafers per year, and the main downstream are aerospace solar photovoltaic cells, etc., which may benefit from the boom in the satellite industry chain.
Risk warning: downstream demand fell short of expectations, raw material prices fluctuated greatly, and industry policies changed.