Revenue/net profit increased in 2023, and the equipment and materials business progressed smoothly
In 2023, the company achieved revenue of 17.983 billion yuan (yoy +69.04%) and net profit to mother of 4.558 billion yuan (yoy +55.85%). The company plans to distribute a cash dividend of 7 yuan for every 10 shares, for a total of about 915 million yuan (tax included). The company's crucible materials business benefited from tight supply in the industry, prices remained high, and the overall gross margin increased in 23 years. Adequate on-hand orders for equipment are expected to drive revenue growth in the main equipment industry in the future. At the same time, the company has a rapid layout in the field of advanced semiconductor manufacturing processes, silicon carbide substrates, and equipment.
We expect net profit to be 59.05/70.26/7.680 billion yuan respectively in 2024-2026; comparable to the company Wind's 24-year average PE is 9 times, giving the company 9 times PE in 24 years, corresponding to a target price of 40.59 yuan (previous value of 56.88 yuan), maintaining a “buy” rating.
Ongoing orders increased at the end of 2023, and the revenue growth of the equipment+material drive company was up to the end of 2023. By the end of 2023, the company had not completed contracts for crystal growth equipment and intelligent processing equipment totaling 28.258 billion yuan, +11.15% over the same period last year, of which 3,274 billion yuan was not completed for semiconductor equipment contracts, or -3.48% over the same period last year.
1) Equipment and services: 23 billion yuan in revenue of 12.812 billion yuan, +51.29% year-on-year; 2) Materials business:
Benefiting from the rapid development of the company's quartz crucible business, revenue in '23 was 4.163 billion yuan, +186.15% year-on-year; 3) Other: Revenue of 1.09 billion yuan in '23, +41.00% year-on-year.
The increase in revenue from the materials business led to an increase in the company's gross margin, and the company's gross profit margin was further strengthened by 41.65% in 23, +2.00pp; the company's net profit margin was 29.54%, +0.61pp. The increase in gross margin was mainly due to an increase of 17.16pp in the material business, and the revenue share increased by 9.48pp. Quartz crucible raw materials are still in a tight balance in the materials business. The price level of quartz crucible is expected to remain high in the future, and the gross margin will remain at a high level; the company's sales/management/development/finance expenses ratio in '23 , 0.45%/2.30%/6.37%/-0.06%, respectively, +0.03pp/-0.39pp/-1.12pp/+0.12pp, respectively. The total rate for the period was 9.07%, -1.35pp year on year.
The photovoltaic and semiconductor business continues to develop and actively expand production, which is expected to continue to release profits. 1) Photovoltaic equipment: successfully developing a fifth-generation monocrystalline furnace based on N-type products to introduce semiconductor superconducting magnetic field technology into the photovoltaic field; the battery side promotes new product processes for photovoltaic cell equipment such as tubular PECVD, LPCVD, diffusion, annealing, single-chamber multi-vessel ALD, and dry cleaning. 2) Semiconductor equipment: The company successfully developed and sold 8-inch and 12-inch atmospheric pressure silicon epitaxial growth equipment, developed 8-inch single-chip and double-chip silicon carbide epitaxial growth equipment; successfully developed optical measuring equipment for silicon carbide substrate and epitaxial sheet volume testing; successfully developed a 12-inch triaxial thinning polishing machine and a 12-inch thinning polishing machine; advanced process end, 8-inch and 12-inch silicon decompression epitaxial growth equipment and ALD equipment have entered the verification stage. 3) Materials business: The production capacity of the Ningxia crucible production base was gradually increased, and the “project with an annual output of 250,000 6-inch and 50,000 8-inch silicon carbide substrates” was built and put into operation. The company's continued R&D and timely expansion of production capacity is expected to further increase profits.
Risk warning: The company's new product development falls short of expectations, the company's new business development is not going well, and industry competition is intensifying.