Incident 1: The company released its 2023 annual report, achieving full year revenue of 1,238 billion yuan, yoy +14.96%; net profit of 403 million yuan, yoy +33.60%; net profit after deducting non-return to mother was 322 million yuan, yoy +7.17%. Net profit to mother and net profit after deducted from non-return to mother were higher than the performance report values and exceeded expectations. Q4 achieved revenue of 340 million yuan in a single quarter, yoy +20.02%, qoq +5.07%; net profit to mother of 87 million yuan, yoy -7.98%, qoq +8.58%; net profit after deducting non-return to mother was 80 million yuan, yoy +7.61%, and qoq -0.87%.
Incident 2: The company announced the 2023 profit distribution plan, increasing 0.3 shares per share and paying 0.35 yuan in cash. Based on the closing price on April 15, 2024, the dividend rate is 0.26%.
Incident 3: The company announced the 2024 restricted stock equity incentive plan. It plans to award 194,700 shares to 70 senior management, technical and business personnel at a price of 72.19 yuan, accounting for 0.20% of the total share capital.
Conclusions and recommendations:
The company is a leading domestic CMP polishing liquid company. Its main business is growing steadily, and its market share continues to increase.
Cleaning solutions and etching solutions are being sold in the Functional Wet Electronics Chemicals section. A technology platform for electroplating solutions and additives is being built; upstream core raw materials are being developed at an accelerated pace to ensure stable supply. The company's various product segments are developing collaboratively, the industrial chain is constantly being enriched, the growth momentum is sufficient, and the “buy” rating is maintained.
Multiple sectors collaborated, and net revenue and profit both increased year on year: the company's revenue and profit increased, and the net profit growth rate was higher than net profit after deducting non-return to mother. Mainly due to the completion of inspection work on some government projects in which the company participated, the total amount of non-recurring profit and loss projects was high. By sector, ① The company's main polishing liquid business operated steadily. The sector achieved revenue of 1,074 billion yuan, yoy +12.98%, and the gross margin of the sector increased by 0.60 pct to 59.19% year-on-year. The R&D process and market expansion of various product lines such as copper and copper barrier polishing liquid, dielectric material polishing liquid, tungsten polishing liquid, cerium oxide abrasive polishing liquid, substrate polishing liquid, and newly applied chemical mechanical polishing liquid are progressing smoothly, and it is expected that the market share will continue to increase. ② The functional wet electronic chemicals sector achieved revenue of 155 million yuan, yoy +24.38%, and the gross margin of the sector increased by 12.10 pcts year-on-year to 32.73%. The company's functional wet electronic chemicals include cleaning liquid and etching liquid; the cleaning liquid part, two types of aqueous post-etching cleaning liquid entered mass production and were used in the advanced Damascus process; the cleaning solution after alkaline copper polishing achieved an important breakthrough, and verification progressed smoothly at the customer's advanced technology node and entered the mass production stage; the etching liquid part, R&D experiments met customer needs and entered the testing and demonstration stage. ③ Relying on the current CMP polishing solution and wet electronic chemicals platform, the company continues to promote the development of the electroplating and additives sector and the core raw materials sector. At present, the advanced packaging electroplating solution and additive market is developing smoothly. Various products have been mass-produced and sold, and the copper Damascus process and silicon through hole (TSV) electroplating solutions and additives have entered the testing and demonstration stage. ④ In terms of core raw materials, various silicasols developed by the company's shareholding company Shandong Ante Nano Materials Co., Ltd. have passed internal testing, and some have been verified and sold by clients; testing and demonstration of self-produced cerium oxide abrasives in the company's products is progressing smoothly. Many products have passed client verification, and mass production and supply has already begun.
The gross margin increased year on year, and the cost control was reasonable: benefiting from the increase in gross profit in various sectors, the company's annual gross margin increased by 1.60 pct to 55.81% year over year. The company's expense ratio increased by 6.92 pct year on year to 28.91%. Among them, the R&D expense ratio increased by 4.13 pcts year on year to 19.11%, mainly due to the lower base period affected by the epidemic in 2022; the sales expense ratio increased 0.71 pct to 3.89% year on year; the management fee ratio increased 0.21 pct to 6.57% year on year; and financial expenses increased 19.06 million yuan year on year, mainly due to a decrease in exchange rate changes.
Adhere to equity incentives and boost employee enthusiasm: The company continues to promote equity incentive plans, expand the number of people covered, and can effectively motivate key employees. The performance assessment of this equity incentive plan is based on the company's 2023 revenue. The revenue growth rate in 2024 and 2025 is greater than or equal to the revenue growth rate of the global semiconductor materials market. The incentive plan is expected to incur expenses of 633, 533, and 1.08 million yuan in 2024/2025/2026, respectively.
Profit forecast: We have revised our 2024/2025 profit forecast and added a 2026 profit forecast. We expect to achieve net profit of 5.60/7.48/976 million yuan in 2024/2025/2026, respectively (the previous value of 2024/2025 was 503/648 million yuan), yoy +39%/+34%/+30%, equivalent to an EPS of 5.65/7.55/9.85 yuan. Currently, the PE corresponding to the stock price of A shares is 24/18/14 times, and the valuation is low, maintaining a “buy” rating .
Risk warning: 1. The price of the company's products falls short of expectations; 2. The release of new production capacity falls short of expectations;