Net profit due to mother decreased by 17.18% year-on-year in 2023. In 2023, the company achieved total revenue of 150 billion yuan, a year-on-year decrease of 16.80%; realized net profit of 171 million yuan, a year-on-year decrease of 17.18%; and realized deducted non-net profit of 161 million yuan, a year-on-year decrease of 20.00%. 2023Q4 achieved revenue of 371 million yuan, a year-on-year decrease of 7% and a month-on-month decrease of 5%; realized net profit of 49.5 million yuan, an increase of 145% year-on-year and an increase of 5% month-on-month; realized deducted non-net profit of 47.84 million yuan, an increase of 129% year-on-year and 8% month-on-month. The company plans to distribute a discovery dividend of 59.94 million yuan (tax included), accounting for 35.03% of net profit due to mother in 2023. In 2023, rare gas raw materials returned to normal levels, leading to a decline in sales prices and revenue for the company's rare gas products; weak demand for consumer electronics, etc., and a decline in the operating rate of downstream semiconductor factories led to a decline in the company's electronic specialty gas business revenue and operating profit in 2023; due to the completion of the issuance of convertible bonds in 2023, the company increased interest expenses on convertible bonds, which also had a certain impact on the company's profits.

Product layout enhances supply capacity. The company closely sets development goals around market demand and its own technical advantages, and always implements the “mass production batch, development batch, reserve batch” product development model to strengthen R&D efforts. In 2023, the company launched 4 new electronic grade products, 1 gas mixture, 1 new fluorocarbon product, and 2 hydrides. The company actively promotes the extension of the industrial chain, with the goal of gradually achieving autonomy in more categories of materials. Second, the company extended the entire industry chain layout from small categories to large categories, and achieved breakthroughs in the entire industry chain of large single-product fluorocarbon and silicon-based products.

The regional layout highlights coverage advantages. Years of overseas business experience have enabled the company to have an international vision, background and international operation capability. Currently, the company has increased the number of on-site gas production projects in Thailand to 3. In 2023, the company built on its original overseas customers and further strengthened its international layout. Through the acquisition of overseas companies, various products empowered the company have passed the certification of “3D NAND manufacturers” in Singapore. In order to cover the Southeast Asian market more fully, the company invests in Malaysian companies and has connected the Southeast Asian market through this layout.

Give full play to the advantages of product certification and business collaboration to increase market share. The company's four lithography products are the only Chinese gas company that has passed ASML and GIGAPHOTON certifications. The company has purchased more than 55 replacement products, and has increased the market share of domestic and foreign semiconductor customers through downstream certification advantages of products. In 2023, the company achieved a historic breakthrough in overseas photographic gas sales.

Resource products ensure stable supply. Since the successful land transportation of the company's first tank of liquid helium in 2023, it is a strategic resource supplement for the company, and also marks a new level in the development of the company's helium business.

The company has achieved controllable resource products from the sales side to the raw material side to ensure stable supply and increased profits.

Profit forecast. We expect the company's 2024-2026 net profit to be RMB250, 3.22 and 386 million yuan, respectively. Referring to companies in the same industry, we gave the company 25-28 times PE in 2024, with a corresponding reasonable value range of 51.88-58.11 yuan, maintaining a “superior to the market” rating.

Risk warning. Macroeconomic cycle; production safety expectations; raw material price fluctuations.