Description of the event
The company released its 2023 annual report, achieving revenue of 1.57 billion yuan (+20.8% year over year), realized vested net profit of 260 million yuan (+54.1% year over year), and realized attributable deducted non-net profit of 260 million yuan (+73.2% year over year). Among them, Q4 achieved revenue of 450 million yuan in a single quarter (+44.4% YoY, +7.7% YoY), realized attributable net profit of 83 million yuan (+416.9% YoY, +15.3% YoY), and realized non-net profit of 84 million yuan (+1674.4% YoY, +17.0% month-on-month). In 2023, the company distributed a cash dividend of RMB 2.0 (tax included) for every 10 shares to all shareholders.
Incident comments
The company is a technology enterprise specializing in the production of thin carrier tape series products and release films for integrated circuits, chip electronic components, etc. The products mainly include paper carrier tape, upper and lower tape, plastic carrier tape and supporting cover tape, release film, cast film, chip carrier board, etc. The company has achieved self-production of raw materials such as raw paper, PET film, and plastic particles, built an integrated industrial chain advantage, firmly grasped customer resource advantages, deeply cultivated key customers such as Samsung Mechatronics and Japan's Murata, strengthened business development, and built customer and brand advantages.
The market space for core products is broad. Thin carriers are used in conjunction with tape or cover tape to protect and place electronic components in an orderly manner to achieve efficient packaging of chip electronic components. The boom in chip components and surface mount technology has driven the continuous growth of thin carriers. The global thin carrier tape market is estimated to be around 7.23 billion in 2021, and is expected to hit 10 billion yuan in 2025.
Precision release films are mainly used in MLCC (chip ceramic capacitors), polarizers, and OCA optical adhesives, and there is huge room for development. It is estimated that from 2021 to 2025, the global MLCC release film market space will increase from 26.5 billion yuan to 36.1 billion yuan.
Entered the continuous restoration channel in 2023. Since 2023, with the recovery in demand for terminal consumer electronics and the gradual rise in industries such as new energy, intelligent manufacturing, and 5G commercial technology, the company's sales have been recovering quarter by quarter, and performance has continued to grow.
2023Q4's gross margin and net margin were 35.9% and 18.7%, respectively. The year-on-year change was +9.0 pct/+13.4 pct, and the month-on-month change was -4.2 pct/+1.2 pct. The development trend continued to improve. The company's financial expense ratio increased year-on-year, mainly due to exchange rate fluctuations during the reporting period and a year-on-year decrease in net exchange earnings for the current period.
The company's production capacity construction and product release are progressing rapidly. The company's fifth electronic base paper production line project accelerated, equipment installation was completed, and trial production began in December 2023; the company actively expanded tape production capacity, which has now reached 3.25 million rolls; the company has broken through the field of high-end plastic carrier belts and currently has more than 80 plastic carrier tape production lines; the company's MLCC release film has achieved stable batch supply to major customers such as Guoju, Huaxinke, Fenghua Hi-Tech, and Sanhuan Group. The Japanese customer Murata is in the small-batch trial stage. The main testing process for Korean customer Samsung has basically been completed, and small-batch orders have been obtained. piece Shipments in the manufacturing sector have increased steadily; the company has fully used homemade BOPET base films, and multi-specification products have passed verification and entered the small-batch trial stage. The second phase of the project is expected to be installed by the end of 2024; the first line was built in trial production at the end of 2023, the second line is being installed, and the Tianjin Fund plans to have an annual production capacity of 480 million square meters of release film; the second phase of the project is expected to complete installation and commissioning and enter trial production in the second quarter of 2024.
The company is a leading company in the field of thin carrier tapes in China, creating integrated, strong R&D, and customer-focused core competitive advantages.
Benefiting from the release of downstream demand and national policy support, there is a broad domestic replacement market for thin carrier tapes and release films. Net profit attributable for 2024-2026 is estimated to be $40/6.0/680 million, respectively, maintaining a “buy” rating.
Risk warning
1. Downstream demand falls short of expectations;
2. Risk of exchange rate fluctuations.