Incident Overview
The company released its 2023 annual report and 2024 quarterly report.
The 2023 results are in line with expectations, and the semiconductor business continues to grow 1) Revenue side: Achieved revenue of 2,429 billion yuan in 2023, -11.03% year over year, of which Q4 was 885 million yuan, -2.83% year over year, and the decline narrowed markedly. By product: The display panel sector achieved revenue of 1,747 billion yuan, -19.41%; the semiconductor sector achieved revenue of 394 million yuan, +116.02% year over year; and revenue from the new energy sector was 241 million yuan, -29.74% year over year. 2) Profit side: Net profit to mother was 150 million yuan in 2023, or -44.79% year-on-year, and realized net profit after deduction of 0.3 million yuan, or -72.83% year-on-year. In 2023, the company's net sales interest rate and net interest rate after deducting non-sales were 3.68% and 1.35%, respectively, compared with -3.94 and -3.08pct, respectively. The profit level declined markedly, mainly due to a decrease in revenue scale and an increase in related expenses. (1) Margin side: The gross margin of sales in 2023 was 48.95%, +4.56pct. Among them, the gross margins of the semiconductor and new energy sectors were 49.72%, 52.83%, and 35.55% respectively, with significant increases of +4.26, +1.69, and +4.18pct, respectively. We judge that it is mainly due to product structure optimization. (2) Expense side: The cost rate for the 2023 period was 50.20%, +10.26pct year on year, clearly suppressing net interest rate performance. Among them, sales, management, finance, and R&D expenses rates were +1.20, +2.68, +1.02, and +5.35 pct, respectively. The company invested 660 million yuan in R&D in 2023, +11.92% year over year (semiconductor R&D investment of 270 million yuan, +27.06% year over year).
The panel shows that the main business is being dragged down, and the 24Q1 profit side is under pressure in the short term
1) Revenue side: 2024Q1 achieved revenue of 418 million yuan, or -30.5% year-on-year, lower than market expectations, mainly due to a drag on the panel business. By business, 2024Q1 achieved revenue of 268 million yuan in the display panel sector, a significant decrease of -33.92%, while the semiconductor sector achieved revenue of 130 million yuan, +95.57% over the same period last year, continuing the rapid growth trend.
2) Profit side: 2024Q1 achieved net profit of 15.93 million yuan to mother, with year-on-year losses, mainly due to the increase in the cost ratio under pressure on the revenue side. The gross sales margin of 2024Q1 was 47.01%, +1.66pct year on year, which was outstanding, mainly due to the increase in the share of semiconductor revenue with high gross margin. The cost ratio for the period of the 2024Q1 company was 62.48%, +16.91 pct. Among them, sales, management, R&D, and financial expenses ratios were +2.18, +5.90, +8.44, and +0.40 pct, respectively. Continued intensive R&D investment further suppressed the short-term profit level, but laid the foundation for the company's long-term growth.
Looking ahead to the full year of 2024, as of the disclosure date of the 2023 annual report, the company has obtained a total order amount of about 3,536 billion yuan, which shows that on-hand orders of 1,248 million yuan, semiconductor orders of 1,602 million yuan, and current orders of 686 million yuan for new energy sources are full, which will support the revenue side to return to the rapid growth channel in 2024.
Domestic replacement of semiconductor quantification/testing equipment is accelerating, and the display and new energy business is also an important growth point
As a leader in display panel testing equipment, the company is actively expanding new technology routes, while laying out the fields of semiconductors and new energy sources to continuously open up room for growth. 1) Panel display: The industry is in a stage of rapid iterative development from LCD to OLED and micro-OLED, and the company is actively laying out related product technology. In addition, the company established Shenzhen Precision Inspection to further help expand the development of AR/VR industry-related businesses in the field of new displays. 2) Semiconductors: The semiconductor measurement equipment market is large, the localization rate is low, and it is one of the segments with high flexibility in the future. At present, the company's core products have covered 1xnm and above. Film thickness products, OCD equipment, and electron beam defect review equipment have obtained repeated orders for advanced processes, which are expected to fully benefit from the expansion of production by domestic fabs in the future. 3) New energy: Further strengthen in-depth cooperation with innovative aviation in the field of lithium battery equipment with core strategic customers. At the same time, substantial progress has been made in implementing the overseas strategic layout in the field of new energy, and overseas customer expansion has achieved remarkable results.
Investment advice
We expect the company's 2024-2026 revenue to be 29.85, 38.30, and 4.804 billion yuan, respectively, +23%, +28%, and +25%. The 2024-2026 net profit to mother will be 2.61, 4.43, and 739 million yuan, respectively, +74%, +70%, and +67%. EPS in 2024-2026 will be 0.94, 1.59, and 2.66 yuan, respectively. The 2024/4/23 stock price of 60.00 yuan corresponds to 64, 38 and 23 times PE. Covered for the first time, a “gain” rating was given.
Risk warning
The display panel industry is declining, semiconductor business expansion falls short of expectations, etc.