Incidents:
On April 24, 2024, Jiang Feng Electronics released its 2023 annual report: the company achieved operating income of 2,602 billion yuan in 2023, an increase of 11.89% over the previous year; net profit to mother was 255 million yuan, a year-on-year decrease of 3.35%.
Comment:
The company's revenue in 2023 increased 11.89% year on year, R&D expenses increased 37.87% year on year, and continued to increase capital investment. The company achieved operating income of 2,602 billion yuan in 2023, up 11.89% year on year; net profit to mother was 255 million yuan, down 3.35% year on year. According to product classification, ultra-high purity target business revenue was 1,673 billion yuan, up 3.79% year on year, gross margin was 28.45%, year on year decrease of 1.93 pct; precision parts business revenue was 570 million yuan, up 58.55% year on year, gross margin was 27.08%, up 3.56 pct year on year; other business revenue was 359 million yuan, up 1.33% year on year, gross margin was 36.08% year on year, up 1.96 pct year on year. Affected by overall fluctuations in the semiconductor industry, the company's comprehensive gross margin was 29.20%, down 0.69pct. The company continues to increase R&D investment. The R&D expenses in 2023 were 172 million yuan, an increase of 37.87% over the previous year, and the number of R&D personnel was 328, an increase of 49% over the previous year. At the same time, the company increased capital investment, with fixed assets of 1,064 billion yuan, up 25.36% year on year; projects under construction were 951 million yuan, up 183.53% year on year; at the same time, the company's purchase of land use rights, equipment, project payments increased and foreign investment increased, and net investment from investment decreased by 179 million yuan compared to the same period last year.
The company is actively developing new product fields, building multiple component production bases, and realizing the application of various types of precision parts products in the core semiconductor process. According to the Frost & Sullivan report, China's semiconductor equipment precision parts market in 2022 was RMB 114.1 billion. The company seized the opportunity of localization to actively promote production capacity construction at Yuyao, Shanghai, Hangzhou, Shenyang and other bases, comprehensively laying out metal and non-metallic semiconductor precision components, and rapid release of core functional components such as gas distribution panels (head showers) and Si electrodes, filling the localization gap and contributing to the localization of components used in process equipment.
The company entered the field of copper-clad ceramic substrates to inject new momentum into the development of third-generation semiconductors in China. Copper-clad ceramic substrates have been widely used in fields such as third-generation semiconductor chips and IGBTs for new high-power power electronic devices. Ningbo Jiangfeng Tongxin, the company's holding subsidiary, has built and completed the first domestic third-generation semiconductor power device module core material manufacturing production line with the world's advanced level, and its main product, high-end copper-clad ceramic substrates, have been initially recognized by the market. The company's holding subsidiary Jingfeng Xinchi has fully deployed the silicon carbide epitaxial field, and silicon carbide epitaxial sheet products have been recognized by many customers.
Company profit forecast and investment rating: The company is a domestic semiconductor target leader, and the semiconductor component business continues. The company's EPS is expected to be 1.45 yuan, 1.86 yuan, and 2.36 yuan respectively in 2024-2026. Corresponding to the current stock price PE is 32X, 25X, and 20X, respectively, maintaining the “recommended” rating.
Risk warning: (1) downstream demand slows down; (2) business expansion falls short of expectations; (3) trade friction intensifies.