Incidents:

1. The company released its 2023 annual report. In 2023, it achieved revenue of 2,429 billion yuan, a year-on-year decrease of 11.03%; realized net profit attributable to owners of the parent company of 150 million yuan, a year-on-year decrease of 44.79%; and realized net profit deducted from mother of 0.3 million yuan, a year-on-year decrease of 72.83%.

2. Judging from the Q4 single-quarter results, we achieved revenue of 885 million yuan, a year-on-year decrease of 2.83% and a month-on-month increase of 103.61%; realized net profit attributable to owners of the parent company of 163 million yuan, an increase of 26.87% year on year; realized net profit deducted from non-mother company of 114 million yuan, an increase of 208.88% year on year.

3. The company released its report for the first quarter of 2024. 2024Q1 achieved revenue of 418 million yuan, a year-on-year decrease of 30.5% and a decrease of 52.74% month-on-month; realized net profit attributable to owners of the parent company of -0.16 million yuan; and realized net profit not attributable to mother of -0.24 million yuan.

The sharp increase in semiconductor revenue shows that revenue from new energy sources is under pressure:

The company achieved revenue of 2,429 billion yuan in 2023, a year-on-year decrease of 11.03%. Among them, products achieved revenue of 1,748 billion yuan, a year-on-year decrease of 19.41%; semiconductor products achieved revenue of 395 million yuan, an increase of 116.02%; and new energy products achieved revenue of 241 million yuan, a year-on-year decrease of 29.74%. In terms of orders, by the end of 23, the company had obtained a total of about 3,536 billion yuan in on-hand orders, including about 1,248 billion yuan in on-hand orders in the display sector, about 1,602 billion yuan in the semiconductor sector, and about 686 million yuan in the new energy sector. Of these, semiconductor orders increased significantly compared to 891 million yuan at the end of 2022. In terms of profitability, the company's net profit fell 44.79% year on year in 2023, mainly because the company's R&D investment increased by 70 million yuan over the same period of the previous year during the reporting period. In addition, the company's display sector was affected by adverse factors such as industry cyclicality and weak market demand, indicating that the operating income of the sector declined significantly compared to the same period last year.

Leading domestic semiconductor measurement equipment company, comprehensive layout of front and rear products:

The company is one of the leading enterprises in the field of semiconductor testing equipment in China, and has basically formed a layout in all fields of semiconductor testing in the front and back stages. The company's subsidiary, Wuhan Jinghong, mainly focuses on the field of automatic test equipment (ATE) (the main product is memory chip testing equipment), and the aging (Burn-In) product line has achieved batch repeat orders, CP (Chip Probe, Chip Detection) /FT (Final Test, or Factory Test) products related to the product line have obtained corresponding orders and completed delivery. Currently, batch orders are being actively sought. Shanghai precision film thickness series products, OCD equipment, and electron beam equipment have received batch orders from many domestic customers; semiconductor silicon wafer stress measurement equipment has also received repeated orders from customers; brightfield optical defect detection equipment has completed delivery and acceptance of the first set, and more advanced process orders have been obtained; remaining products with reserves such as graphic dark field defect detection equipment are currently in the process of R&D, certification and expansion. Semiconductor measurement equipment is the core equipment in chip manufacturing and has an important impact on chip yield. Currently, most of it is monopolized overseas. The company has a comprehensive layout of related equipment, and is expected to fully benefit from domestic replacement of related equipment in the future.

Investment advice:

We expect the company's revenue from 2024 to 2026 to be 2,964 million yuan, 3.705 billion yuan, and 4.261 billion yuan, respectively, and net profit to mother of 261 million yuan, 366 million yuan, and 474 million yuan respectively. Considering the recovery of the semiconductor industry, the company's orders in the semiconductor and new energy sector continued to grow. Using the PS valuation method, the company was given a valuation of P/S7.00X in 2024, corresponding to a target price of 74.62 yuan. The investment rating is “Accumulated Holdings-A”.

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.