Incident: The company released its 2024 quarterly report. 24Q1 achieved revenue of 333 million yuan, yoy -7.30%, net profit to mother of 45 million yuan, yoy +12.68%, after deducting net profit of 44 million yuan and yoy +12.44%.
24Q1 performance increased year over year, and profitability continued to recover. In 2023, the company's specialty gas segment achieved revenue of 1,022 million yuan, yoy -22.67%, gross profit margin of 36.21%, yoy +5.32 pct; general industrial gas sector achieved revenue of 227 million yuan, yoy +3.11%, gross profit margin of 14.04%, yoy +1.62 pct; equipment and engineering sector achieved revenue of 210 million yuan, yoy -13.98%, gross profit margin of 9.88%, yoy -2.70 pct. In 2023, the company achieved gross sales margin of 30.59%, yoy+3.71 pct, net sales margin 11.47%, yoy+0.01 pct. As the share of the company's high-margin products increased and the level of overseas gross margin increased, 2024Q1 had a gross sales margin of 33.04%, yoy +2.79 pct, net sales margin of 13.62%, yoy +2.36 pct.
Demand for semiconductor materials is expected to grow by nearly 7% in 2024. According to TECHCET and Guanyanxia data, the global electronic specialty gas market is expected to reach 6.023 billion US dollars in 2025, and the CAGR will reach 6.39% in 2024; the domestic electronic special gas market is expected to reach 23 billion yuan in 2024, and the CAGR will reach 10.31% in 2024. According to TECHCET, semiconductor materials declined 6% year over year in 2023, and are expected to grow nearly 7% in 2024 as conditions improve. With the continued recovery of the semiconductor industry's prosperity and the continuous acceleration of the domestic substitution process, the company is expected to benefit deeply.
Continue to develop new products, expanding from small categories to large categories. The company continues to expand the gas category. In 2023, it launched 4 new electronic grade products, 1 gas mixture, 1 new fluorocarbon product, and 2 hydrides, extending from a small category to a large category. The entire industry chain layout of large single fluorocarbon and silicon-based products has achieved breakthroughs. By the end of 2023, the company had achieved import substitution of more than 55 products, and 57 ongoing research projects accounted for the main proportion of products used in etching processes. Germanium has passed the certification of the 5nm process production line of Korea's largest memory company and generated an order. In terms of helium, the company's first tank of liquid helium was successfully transported by land in 2023, indicating that the company successfully mastered the helium source and greatly enhanced supply stability.
Overseas layout has been strengthened, and gross margin has increased significantly. The company has increased the number of on-site gas production projects in Thailand to 3; through the acquisition of AIG in Singapore, it has warehousing, logistics and technical service capabilities in Singapore, and overseas end customers are gradually switching to direct sales by the company; by investing in Malaysian companies, it has connected the Southeast Asian market. In 2023, the company's overseas sales gross profit margin was 26.92%, yoy +7.6 pct.
Maintain a “Highly Recommended” investment rating. The company's net profit for 2024-2026 is estimated to be 2.3, 3.1, and 390 million yuan respectively, and EPS is 1.94, 2.57, and 3.27 yuan respectively. The current stock price corresponds to PE of 24.1, 18.3, and 14.4 times, respectively, maintaining a “highly recommended” investment rating.
Risk warning: Product prices fluctuate greatly, downstream demand falls short of expectations, and the commissioning of new production capacity falls short of expectations.