Incidents:
1. The company released its 2023 annual report. In 2023, it achieved revenue of 2,391 billion yuan, an increase of 9.82% over the previous year; realized net profit attributable to owners of the parent company - 93 million yuan; and realized net profit deducted from mother - 162 million yuan.
2. Judging from the Q4 single-quarter results, we achieved revenue of 760 million yuan, an increase of 64.28% over the previous year, and an increase of 17.17% over the previous month; realized net profit attributable to owners of the parent company of 0.27 million yuan; and realized net profit without deduction of 0.1 million yuan.
3. The company released its report for the first quarter of 2024. 2024Q1 achieved revenue of 727 million yuan, a year-on-year increase of 71.11%, a year-on-year decrease of 4.36%; realized net profit attributable to owners of the parent company of -0.35 million yuan, an increase of 28.91% over the previous year; and realized net profit deducted from non-mother of -46 million yuan, an increase of 33.28% over the previous year.
Net profit under phased pressure in '23
The company achieved revenue of 2,391 billion yuan in 2023, an increase of nearly 10%. Among them, system-level packaging products achieved revenue of 1,249 billion yuan, an increase of 1.92%; flat pinless packaging products achieved revenue of 748 million yuan, an increase of 18.46%; and high-density fine-pitch convex inverted products achieved revenue of 366 million yuan, an increase of 25.20% year on year. In 2023, the company's net profit fell 167.48% year on year, mainly due to the global industry cycle. Overall orders from downstream customers were still weak, and order prices for some product lines were under pressure, causing the company's gross margin to still decline compared to the same period last year. At the same time, the company's second phase project construction progressed in an orderly manner, and the company's personnel scale continued to expand, and personnel expenses and phase II preparation costs increased, leading to a 71.97% year-on-year increase in management expenses.
The revenue growth rate increased significantly from quarter to quarter
Looking at quarterly revenue, the company's revenue growth rate improved markedly from quarter to quarter. With 23Q1-24Q1, the company achieved revenue of 425 million yuan, 558 million yuan, 648 million yuan, 760 million yuan, and 727 million yuan, respectively -26.86%, +0.55%, +12.00%, +64.28%, and +71.11% year-on-year, respectively. The main reasons for the continued significant increase in the company's revenue are the continuous introduction of new products, the continuous expansion of production capacity, and the continuous increase in the company's operating rate.
Actively lay out advanced packaging to open up room for growth
The company actively lays out advanced packaging, and the Bumping and CP projects invested with its own capital have been completed, and it has a one-stop delivery capability to provide customers with “Bumping+CP+FC+FT”.
Furthermore, the company has mastered RDL and bump processing capabilities through the implementation of the Bumping Project, and is actively deploying fan-out packaging (Fan-out) and 2.5D/3D packaging processes. Advanced packaging can greatly improve chip integration and increase communication speed between chips, and is an important means of continuing Moore's Law. Judging from downstream demand, the AI wave has played a key role in the development of advanced packaging. Currently, most AI chips use Cowos advanced packaging. The company's forward-looking layout in the field of advanced packaging will lay the foundation for the sustainable development of the company's future performance, and it is expected that it will continue to benefit from the development trend of advanced packaging.
Investment advice:
We expect the company's revenue from 2024 to 2026 to be 2,869 million yuan, 3.615 billion yuan, and 4.288 billion yuan, respectively, and net profit to mother of 255 million yuan, 380 million yuan, and 477 million yuan respectively. Considering the recovery of the semiconductor industry, and the company's focus on the field of advanced packaging, the company was given a valuation of PE40.00X in 2024, corresponding to a target price of 25 yuan. Give it a “buy-A” investment rating.
Risk warning:
The risk of new technologies, new processes, and new products not being industrialized as scheduled, the risk of industry and market fluctuations, the risk of international trade friction, and the risk of rising product production costs.