Incident Overview
The company released its 2024 quarterly report. With 2024Q1, the company achieved operating income of 202 million yuan, up 39.46% year on year, net profit of 52 million yuan, up 79.94% year on year, up 6.12% month on month; net profit after deducting non-return to mother was 46 million yuan, up 99.97% year on year and 6.98% month on month.
Analytical judgment:
Increased orders increased revenue, and product structure optimization increased profit even more in 2024Q1. The company achieved operating income of 202 million yuan, +39.46%. The main reason for the increase in sales orders was increased; net profit to mother of 52 million yuan, +79.94%, +6.12% month-on-month; net profit after deducting non-return to mother was 46 million yuan, +99.97% year-on-month, +6.98% month-on-month; gross sales margin was 40.71%, +4.13pct, month-on-month; year-on-month +3.16pct; year-on-month net profit margin 25.55% Ratio +5.75pct, month-on-month ratio +1.07pct. Compared to revenue, the company's profit increased even more, and the main reason for the large increase in profit was due to changes in the company's product sales structure.
Industry sentiment has increased, and the company has made every effort to increase R&D to help long-term growth. According to SIA data, sales in the global semiconductor industry have been growing continuously for 8 months since March 2023. At the same time, the development of AI and other technologies is bringing about a new round of technological innovation, and is expected to accelerate recovery in some terminal fields, accelerate the development of advanced packaging materials, high-frequency high-speed substrates, carrier boards, thermal conductive materials, etc., thereby driving demand for upstream materials. The company continued to increase R&D. In 2023, the company invested a total of 47.4 million yuan in R&D, up 23.13% year on year, and R&D investment accounted for 6.66% of revenue and obtained 13 intellectual property rights; 2024Q1, the company invested 129.769 million yuan in R&D, up 34.62% year on year, and R&D investment accounted for 6.42% of revenue. The company's early focus on research and development has entered the harvest period. The products are sold to industry-leading packaging materials such as EMC, LMC, and UF, as well as in various fields such as copper-clad plates, thermal interface materials, adhesives, etc., and sold to leading customers in the industry in micron and sub-micron spherical silicon powder, low-radioactivity spherical silicon powder, and high-purity spherical alumina powder with low radioactivity. According to the company's 2023 annual report, we judge that in the future, the company will continue to push customers to speed up the verification of new products, obtain more certification from customers in overseas markets, increase the share of high-end products, and vigorously expand new application fields such as thermal conductive materials, thereby promoting the steady growth of the company's performance.
Profit forecasting and investment advice
The company is a leader in the inorganic filler and particle carrier industry. Its products can be used in the field of advanced packaging and supplied to internationally renowned manufacturers. We maintain our profit forecast. We expect the company's revenue for 2024-2026 to be 913/10.97/1,260 million yuan, respectively, net profit to mother of 2.51/3.05/356 million yuan, and EPS of 1.35/1.64/1.91 yuan respectively, corresponding to the closing price of 45.15 yuan on April 25, 2024, PE is 33/28/24 times, respectively. Downstream demand is recovering steadily, and the company is promoting product structure upgrades and continuing to increase R&D. We are optimistic about the company's long-term growth and maintain a “buy” rating.
Risk warning
The risk that downstream customer certification progress falls short of expectations; the risk that the growth rate of terminal demand falls short of expectations; the risk that the competitive landscape will deteriorate.