The recovery began in Q1 in '24, under pressure from '23. The company's high-end testing machines are expected to lead domestic production to replace Changchuan Technology in publishing its '23 annual report and quarterly report for '24, achieving revenue of 1,775 billion yuan (yoy -31.11%) in 2023, net profit of 45.1596 million yuan (yoy -90.21%), and deducting non-net profit of 76.5571 million yuan (yoy -119.40%). Among them, Q4 achieved revenue of 566 million yuan (yoy -31.21%, qoq +26.73%) and net profit of 43.833,900 yuan (yoy -67.70%, qoq +328.86%).
In Q1, the company achieved operating income of 559 million yuan/yoy +74.81%; net profit to mother was 0.04 billion yuan/yoy +107.12%. We expect the company's 24-26 EPS to be 0.75/1.34/1.91 yuan, respectively. Comparable to Ifind's 24-year consensus, the average PE value was 40.36 times. Considering that the company has broad domestic replacement space in the field of semiconductor back-end SOC digital testing machines, continuous research and development is expected to lead the domestic replacement of SOC testing machines, giving the company 45 times PE in 24 years, with a target price of 33.75 yuan, maintaining a “buy” rating.
The pressure on the 23-year performance was due to a temporary slowdown in customer demand for testing machines. Revenue picked up year-on-year in Q1 in 2023, and the company achieved a total revenue of 1,775 billion yuan, or -31.1% year over year; in a single quarter in Q4, revenue of 566 million yuan, or -31.2% year-on-year, mainly due to changes in the industry cycle and the slowdown in customer demand. Net profit to mother in 2023 was 45 million yuan, -90.2% year on year; Q4 net profit was 44 million yuan, -67.7% year over year; mainly because the company increased R&D expenses for high-end testing equipment, which dragged down the net profit level.
In 2024, Q1 achieved operating income of 559 million yuan/yoy +74.81%; net profit to mother was 0.04 billion yuan/yoy +107.12%, mainly due to factors such as a recovery in mobile phone shipments to increase demand for testing machines.
Net profit margin for 23 years was under pressure, and R&D continued to be invested in upgrading high-end testing equipment throughout 2023. The company's gross profit margin was 57.1% /yoy+0.32pct; in the Q4 quarter, the company's gross profit margin was 56.1% /yoy-6.35pct. The company's overall net interest rate in 2023 was 3.42% /yoy-15.22pct, and the Q4 net margin was 8.50%/yoy-9.23pct. In terms of the period cost ratio, the company's sales expenses rate in 2023 was 8.8% /yoy+2.23pct; the management expense ratio was 12.6% /yoy+4.56pct; the financial expense ratio was 0.9% /yoy+1.06pct; and the R&D expenses rate was 40.3% /yoy+15.26pct. The decline in revenue and the increase in R&D expenses meant that the company met high-end customer needs and increased investment in high-end testing machine research and development. The overall gross margin and net margin of the 2024Q1 company were 54.60%/0.66%, respectively, and both declined month-on-month.
Semiconductor back-end testing equipment is expected to recover in 24/25. According to the SEMI report, the semiconductor back-end testing equipment market sales will shrink by 15.9% to US$6.3 billion in 2023. The post-test equipment sector is expected to grow 13.9%/17% in 2024/25, and semiconductor back-end test equipment is expected to continue to recover in 24/25. The company has now formed a comprehensive layout of testing machines/sorters/probe stations. 1) The company's D9000 Soc testing machine series is a high-performance integrated circuit testing machine aimed at mass production and testing of digital IC products. It can be applied to chip CP testing and FT testing; 2) The company completed issuing shares to purchase assets to acquire Changyi Technology (Malaysia Exis) in 23 to achieve full product coverage of gravity sorters, translational sorters, and turret sorters.
Risk warning: Semiconductor recovery is low, new product development falls short of expectations, and foreign technology restrictions risk.