Core views:
Industry cycle fluctuations and depreciation of production expansion dragged down 23-year results. The company published its annual report for the year 23. In '23, the company's revenue was 3.19 billion yuan, yoy -11.39%, net profit of 187 million yuan, yoy -42.61%. Affected by the overall economic environment and the downward cycle of the semiconductor market, the company's revenue declined year on year. At the same time, due to unavoidable upfront investment and fixed costs in the company's production expansion process, and continued high investment in R&D expenses, the performance declined year on year; gross profit margin was 16.46%, yoy-6.26pct; net profit margin was 5.04%, yoy-4.53pct. In Q4 '23, the company's revenue was 800 million yuan, yoy -20.32%, qoq -1.99%, net profit loss of 26 million yuan; gross profit margin 9.42%, yoy-14.21pct, qoq-5.66pct; net profit margin -3.67%, yoy-24.65pct, qoq-5.2pct.
Actively promote production capacity reserves and continue to promote domestic replacement of high-end silicon wafers. According to the company's 23 annual report, the company is one of the largest domestic semiconductor silicon wafer companies with the most comprehensive technology and the highest degree of internationalization. At present, the subsidiary Xinsheng's total production capacity of 300mm silicon wafers has reached 450,000 wafers/month, and full production and shipment was achieved in December '23. It is expected that by the end of '24, Xinsheng will achieve the production capacity building target of 600,000 wafers per month. At the same time, Xinsheng invested in the construction of a “300mm semiconductor silicon wafer drawing and cutting and polishing production base” in Taiyuan. Through this, Xinsheng is expected to further expand the product range, diversify the product portfolio, and continue to promote the localization process of the semiconductor industry chain; the subsidiary Xinao continues to promote 300mm high-end silicon-based material research and development pilot projects to better meet the market and customer needs in RF and other application fields, and has now built a 300mm high-end silicon-based material test line with a production capacity of about 60,000 pieces/year; the subsidiary Okmetic is in Vantaa, Finland The 200mm semiconductor specialty silicon wafer production expansion project is being built as planned to strengthen Okmetic's market position in high-end segments such as advanced sensors, power devices, RF filters, and integrated passive devices.
Profit forecasting and investment advice. The company is expected to achieve EPS 0.09/0.12/0.16 yuan/share in 24-26 years. Considering the company's leading position in the domestic silicon wafer industry and the capacity scale advantage of continuous expansion, the company's view of a reasonable value of 26.52/shares remains unchanged, and maintains a “buy” rating.
Risk warning. Downstream demand fell short of expectations, production capacity climbed short of expectations, and market competition intensified.