Incident: In 2023, the company achieved revenue of 3,980 billion yuan, a year-on-year increase of 44.64%, net profit attributable to mother of 214 million yuan, a decrease of 14.70%, after deducting net profit of 210 million yuan, a decrease of 10.97%. The reviews are as follows:
Q4 Revenue continued to accelerate in a single quarter, and the semiconductor business led to a high increase in revenue. On a quarterly basis, the company's 2023Q1, Q2, Q3, and Q4 revenue was -7.29%, +28.00%, +58.58%, and +86.46%, respectively; net profit to mother changed by -5.80%, -42.27%, +3.08%, and +3.70% year-on-year, respectively; net profit after deducting non-return to mother changed +47.55%, -37.97%, +14.26%, and -31.57%, respectively. By business, revenue from semiconductors, pan-semiconductors, new displays, life sciences, food and drug health, and other businesses was 28.70, 4.26, 3.66, 2.11, and 107 million yuan, respectively, up 139.52%, -60.19%, 13.90%, 79.57%, and 136.40%, respectively; accounting for 72.12%, 10.70%, 9.19%, 5.29%, and 2.70%, respectively.
The decline in the company's net profit for the full year of 2023 was mainly affected by the rapid growth in the size of contract assets, which led to a significant passive increase in preparation for bad debts, and the increase in bad debt preparation for accounts receivable.
Gross margin declined and depreciation increased sharply, leading to a decline in net interest rates and a slight decrease in net operating cash inflows.
In terms of gross margin, the company's gross margin fell 3.24 pcts to 11.43% year-on-year in 2023, mainly due to increased competitive pressure in the market. Among them, the gross margins of semiconductors and pan-semiconductors, new displays, life sciences, food and drug health, and other businesses decreased by 3.33, 1.76, 0.97, 3.09, and 8.34 pcts, respectively. In terms of the fee rate for the period, the fee rate for the 2023 period also decreased by 1.11 pcts to 2.77%. Among them, the sales expense ratio decreased by 0.01 pcts to 0.66%, the management fee ratio decreased by 0.45 pcts to 2.84% year on year, and the financial expenses ratio decreased by 0.65 pcts to -0.73% year on year (mainly due to the company's IPO capital raised and deposit interest income increased a lot year over year). Furthermore, in 2023, the company's asset impairment and credit impairment losses amounted to $64 million, up 363.32% year over year. Overall, the net margin dropped 3.74 pcts to 5.38%. The net operating cash flow inflow was 214 million yuan, down 1.61% from the 2022 net inflow of 217 million yuan; of these, revenue decreased 15.87 pcts to 87.04% compared to the same period, and current payments decreased 15.51 pcts to 81.84% compared to the same period. Furthermore, the company's weighted average ROE in 2023 decreased by 12.11 pcts to 9.44%.
Benefiting from the accelerated increase in domestic semiconductor replacement orders, the dividend ratio also increased 21.08 pcts to 51.28%.
The current round of domestic substitution in the semiconductor industry and the rapid expansion of advanced production capacity for new photovoltaic energy sources are driving demand in the clean room industry. The company added 4.950 billion yuan in contract amount (excluding tax) in 2023, an increase of 48.24%; of these, the semiconductor and pan-semiconductor industry also increased 69.74%. As of the end of 2023, the company's on-hand orders amounted to RMB 2,871 million (excluding tax), an increase of 57.90%. Among them, orders for semiconductors and pan-semiconductors, novel displays, life science, and food and drug health were 2,244 million yuan, respectively, accounting for 78.14%, 12.97%, and 8.23%, respectively. In terms of dividends, the company's total cash dividend in 2023 was about 110 million yuan, with a dividend ratio of 51.28%, a significant increase of 21.08 pcts compared with the 2022 dividend ratio of 30.20%.
Profit forecasting and ratings. The company is a first-tier clean room enterprise in China. Customers are high quality, have strong stickiness, rich project experience, and a high increase in orders, benefiting from domestic substitution and technological innovation in the downstream semiconductor industry. We expect the company's 24-25 EPS to be 0.53 yuan and 0.64 yuan respectively, giving a price-earnings ratio of 22-25 times for 24 years, and a reasonable value range of 11.74-13.34 yuan, maintaining the “superior to the market” rating.
Risk warning. Downstream demand falls short of expectations, industry competition intensifies, and there is a risk of macroeconomic fluctuations.