Conclusions and recommendations:
The company's revenue increased by 50% in 2023, and net profit increased by 66%, reflecting the continued promotion of domestic replacement of semiconductor equipment. At the same time, 1Q24 median revenue increased by 50%, median net profit increased by nearly 90%, and the performance growth rate exceeded expectations.
Looking forward to the future, as a domestic equipment platform company, the company has accumulated a lot in semiconductor equipment fields such as etching, deposition, heat treatment, and cleaning equipment. While carrying the heavy responsibility of localization, it has further opened up its own market space. We expect the company's net profit for 2024-26 to be 5.8 billion yuan, 7.5 billion yuan, and 9 billion yuan; YOY will increase by 49%, 29%, and 21%; EPS will be 10.96 yuan, 14.12 yuan, and 17.07 yuan. The current stock price corresponding to 2024-26 PE is 26 times, 21 times, and 17 times, respectively, giving it a buying rating.
Strong increase in 2023 performance: The company released the 2023 performance report and 1Q24 forecast. In 2023, the company achieved revenue of 22.1 billion yuan, YOY increased 50%, realized net profit of 3.9 billion yuan, YOY increased 66%, net profit after deduction of 3.58 billion yuan, and YOY increased 70%. The company's performance is within the median forecast range and is in line with expectations.
1Q24's performance exceeded expectations: The company expects 1Q24 to achieve 5.42 billion yuan to 6.24 billion yuan, YOY to grow 40%-61%, achieve net profit of 1.04 billion yuan to 1.2 billion yuan, YOY increase 76%-103%, net profit after deduction of 990 million yuan to 1.14 billion yuan, YOY increase 85%-114%, and the company's performance is better than estimated.
We believe that the reason the company's performance is better than expected is that the domestic production process of local semiconductor equipment continues to exceed expectations, while the company's scale effect continues to increase, driving net profit to a record high during the same period.
New orders are worth 30 billion yuan, and the performance growth is highly certain: in 2023, the company signed more than 30 billion yuan of new orders, of which the integrated circuit sector accounts for more than 70%. It is 1.4 times the 2023 revenue, and the increase in performance is highly certain.
Profit forecast: In the long run, it is expected that production capacity at the semiconductor manufacturing side of mainland China will continue to expand. As a leader in the domestic equipment sector, the company is in a leading domestic position in many segments, and will continue to benefit from the increase in demand for domestic fabs to expand production. The company's net profit for 2024-26 is expected to be 5.8 billion yuan, 7.5 billion yuan, and 9 billion yuan, YOY will increase by 49%, 29%, and 21%, and EPS will be 10.96 yuan, 14.12 yuan, and 17.07 yuan. The current stock price corresponding to 2024-26 PE is 26 times, 21 times, and 17 times, respectively, giving it a buying rating.
Risk warning: Increased technological friction has led to a decline in demand from fabs