The company's 2023Q4 performance grew rapidly year on month, maintaining the “buy” rating company's 2023 annual performance report. The company achieved operating income of 11.298 billion yuan in 2023, -5.1% year over year; net profit to mother of 226 million yuan, -69.98% year on year; deducted non-net profit - 308 million yuan, -216.69% year on year.

Among them, 2023Q4's revenue reached 3.23 billion yuan, +16.21%, or 8.4% month-on-month; net profit to mother was 143 million yuan, +189.2% year-on-year, and +617.49% month-on-month; after deducting non-net profit - 0.2 billion yuan, +85 billion yuan year-on-year, and +79 million yuan month-on-month. Affected by increased competition in the industry, the price of packaging products declined slightly. We slightly lowered the company's profit forecast for 2024-2025 and added a 2026 performance forecast. The estimated net profit for 2024/2025/2026 is 6.64/10.3/1,537 million yuan (previous value: 953/1,359 million yuan). EPS is expected to be 0.21/0.32/0.48 yuan (previous value was 0.34/0.49 yuan). The current stock price corresponds to PE 38.7/ 24.9/16.7 We are optimistic that the company's orders will continue to be repaired and maintain a “buy” rating.

The 2024 revenue target is growing steadily, with advanced packaging continuing to increase its market share. The integrated circuit industry generally showed a trend of falling back to the bottom in the first quarter and gradually recovering in the second quarter. The company responded positively to the unfavorable market environment where packaging prices declined due to increased competition, and the company's sales revenue improved quarter by quarter. In 2023, the company completed 46.929 billion integrated circuit packages, +11.95% YoY, and 1.2730 million wafer-level integrated circuit packages, -8.38% YoY. Looking at subsidiary companies, Huatian Xi'an's revenue for the full year of 2023 was 2,755 billion yuan, +5.37% YoY, net profit -107 million yuan; Huatian Kunshan revenue of 1,365 billion yuan, -12.11% YoY, net profit of 102 million yuan, -51.6% YoY; Huatian Xi'an and Huatian Nanjing had revenue of 2.28 billion yuan, +32.3% YoY, net profit of 208 million yuan, +271.06% YoY; UNISEM revenue of 1,463 billion ringgit, -18.97% YoY, net profit of 80,000,000 yuan MYR, -79.18% YoY. The main reason for the year-on-year decline in Huatian Kunshan's business performance was the decline in demand in the terminal electronics market in 2023, industry competition intensified, and the price of packaging products declined; the main reason for the year-on-year decline in Unisem's business performance was mainly due to the disposal of land and housing buildings by the subsidiary pTunisem in 2022, which resulted in asset disposal revenue. In 2024, the company set a revenue target of 13 billion yuan, +15.06% year-on-year. As the company vigorously develops advanced packaging technologies and products such as SiP, TSV, WLP, 2.5D, 3D, Chiplet, and FOPLP, it is expected to accelerate the increase in market share and profitability.

Risk warning: The recovery in industry sentiment falls short of expectations, the progress of production expansion falls short of expectations, and product development falls short of expectations.