Incident: The company achieved operating income of 5.01 billion yuan, yoy +6.17%; net profit to mother was 107 million yuan, a year-on-year decrease of 24.37%.
It shows that business profitability is declining, and new production capacity is gradually being implemented
The 23FY sector achieved revenue of 3.27 billion yuan, yoy +4.7%, gross profit margin of 11.2%, a year-on-year decrease of 2.4 pcts, mainly due to the slow macroeconomic recovery trend in 2023, weak demand for consumer electronics market renewal, and consumer confidence. We expect industry prosperity to pick up this year.
The company produces 13.5 million pieces of laptop touch display module production line per year. Currently, 2 automotive and 4 laptop cable production lines have been installed, and 2 laptop production lines are under construction. UTG Phase II has completed the construction of 4 production lines, forming a certain production capacity. At the same time, the primary molding of the original UTG film and the new UTG/UFG processing technology, which are being continuously developed, are expected to reach the scheduled state of use in December 2024.
The new materials business has blossomed a bit, and the future can be expected
a) Kaisheng Yingcai (62.6% shareholding ratio) achieved revenue of 648 million yuan, yoy +5.2%, net profit of 125 million yuan, yoy -28.9%. Net interest rate fell 9pct year on year. We believe that the decline in profitability was mainly due to rising raw material prices. At present, the company's high-purity quartz sand production line for photovoltaic quartz crucibles prepared from mineral purification has been built and delivered in batches. High-purity ultrafine spherical silicon dioxide samples and polishing liquid for semiconductor packaging have been verified by domestic and foreign customers, forming small-batch sales.
b) The subsidiary Bengbu Zhongheng achieved revenue of 978 million yuan, yoy -8.4%, net profit of 86 million yuan, yoy -22.5%, and net interest rate of 1.6 pct year-on-year decline. 23FY, the company built 2,400t/a spherical powder material for electronic packaging, and an additional 6,000 tons of production capacity per year.
The company is further promoting the development of various new technologies such as UTG iterative technology, screen-directed sound, glass-based Mini-Led backlighting, high-strength transparent microcrystalline glass processing, automotive smart cockpits, high-purity synthetic silicon dioxide, electronic grade silica, and nanocomposite zirconia. New material platform products are constantly being upgraded, and the future can be expected.
Investment advice
The company continues to expand in the field of new materials, has obvious technical advantages in the UTG field, and later has a large domestic replacement capacity. We slightly adjusted our previous profit forecast. We expect the company to have net profit of 26/406/53 billion yuan in 24-26 (previous value: 27/420 million yuan in 24-25), corresponding to 43/27/21 times PE, maintaining a “buy” rating.
Risk warning: Uncertain risks brought about by iterative changes in application technology in the downstream market, production capacity investment of high-purity quartz sand falls short of expectations, downstream demand falls short of expectations