Description of the event
In 2023, the company achieved revenue of 17.983 billion yuan, +69.04% year-on-year, and net profit to mother of 4.558 billion yuan, +55.85% year-on-year.
Among them, 2023Q4 achieved revenue of 4.521 billion yuan, +42.37% year-on-year, and net profit to mother of 1,044 billion yuan, +13.96% year-on-year.
Incident comments
Performance remained high, and the materials sector drove an increase in profit margins. Thanks to the continuous acceptance of equipment orders and the volume of the materials business, the company's revenue and net profit remained high. Among them, revenue from the equipment sector increased 51.29% year on year, and revenue from the materials sector increased 186.15% year on year. The gross profit margin for 23 years was 41.65%, up 2 pct from 39.65% in 2022. Among them, the gross margin of the equipment business fell 1.95 pct to 38.85% but remained high. The main reason was that the gross margin margin of some of the company's newly laid out equipment was slightly lower and the gross margin of the original superior equipment remained high; the gross margin of the materials sector increased by 17.16 pct to 56.15%, mainly high gross margin businesses such as quartz crucibles. As the share of material revenue expands, the company's overall profitability is expected to increase further. Thanks to this, the company's net sales profit margin in '23 was 29.54%, an increase of 0.61 pct over the same period last year.
The equipment is in hand and there are lots of orders. As of the end of 23Q4, the total number of in-hand orders for the company's equipment was 28.258 billion yuan, of which 3.274 billion yuan (tax included) were in hand for semiconductor equipment. The company's overall on-hand order amount remained high. 1) Photovoltaic equipment. The company continues to develop new products. The silicon wafer side has developed a fifth-generation monocrystalline furnace based on N-type products, introducing superconducting magnetic fields to create differentiated core competitiveness. On the battery side, new product processes for photovoltaic cell equipment such as tubular PECVD, LPCVD, diffusion, annealing, single-chamber multi-boat ALD, and boat dry cleaning have been rapidly promoted. Related equipment has been verified by mainstream manufacturers in the industry. On the module side, the entire supply capacity of the tile stacking equipment production line has been realized, and large-scale orders have been obtained. More product layouts enhance the company's competitiveness and ability to withstand cyclical fluctuations, and also lay the foundation for the rapid development of the next cycle. 2) In terms of semiconductor equipment, in the field of power semiconductors, 8-inch and 12-inch atmospheric pressure silicon epitaxial growth equipment was developed and sold, and 8-inch single-chip and double-chip silicon carbide epitaxial growth equipment with international advanced standards was released. We have successfully developed optical measuring equipment for measuring the amount of silicon carbide substrates and epitaxial sheets, and realized the localization of silicon carbide quantity testing equipment. Successfully developed a 12-inch triaxial thinning polisher and a 12-inch thinning polishing and cleaning all-in-one machine for wafer manufacturing and advanced packaging. In the field of advanced manufacturing processes, 8- and 12-inch silicon decompression epitaxial growth equipment and ALD equipment have successively entered the verification stage.
The scale of the new materials industry increased rapidly, opening a second growth curve. The company has established a product system focusing on high-purity quartz crucibles, diamond wire, sapphire, SiC substrates, semiconductor valves, pipe fittings, magnetic fluids, and precision components, and has developed products such as synthetic sand quartz crucibles and a new generation of diamond wire. The revenue of the materials business in '23 was 4.163 billion yuan, accounting for 23.2%, a significant increase from '22. For quartz crucibles, the company has accelerated the increase in production capacity, and the business is expected to grow further; in the diamond wire field, the first phase of the mass production project was put into operation and mass sales were achieved, actively promoting the construction of the second phase of the production expansion project and speeding up the investment in tungsten wire production capacity. SiC yield increased rapidly, and a “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 core quality parameters of mass-produced chips reached industry-leading levels, and batch shipments were made. The materials business is expected to grow further in '24.
The company's net profit for 2023-2025 is estimated to be 55.39, 61.65, and 6.768 billion yuan, respectively. The corresponding PE is 7, 7, and 6 times, respectively. It maintains a “buy” rating and continues to be recommended.
Risk warning
1. The risk that downstream production expansion falls short of expectations;
2. The risk that the company's new product development progress falls short of expectations;
3. The risk of on-hand order fulfillment.