Brief performance review
On the evening of April 25, 2024, the company disclosed its 23 annual report and 24 quarterly report. We achieved revenue of 1.51 billion yuan for the full year of 23, +22.7% year-on-year; realized net profit of 170 million yuan, or +40.8% year-on-year. 1Q24 achieved revenue of 270 million yuan, +2.1% year on year; net profit to mother of 40 million yuan, +5.4% year over year.
Management analysis
The share of consumables continues to rise. Stock customers have a stable demand for regular filter replacement, and the lockdown effect of overseas customers is even more prominent. According to the company's annual report, the company's revenue from replacement consumables accounted for 30% of total revenue in '23. An increase in the share of consumables will help stabilize performance fluctuations and improve the quality of cash flow. The company's operating cash flow improved significantly in '23, with a net amount of 120 million yuan (-80 million yuan in '22).
Overseas expansion accelerated. The company's total revenue in '23 was +22.7% YoY, and overseas business revenue was 170 million yuan (+30.8% YoY). Overseas expansion helped increase the unit price of the product. In '23, sales of FFU+ filter products were +14.3%, while business revenue was +32.4%. The company's overseas sales had a premium, reflecting the high level of recognition from overseas customers.
The company seizes industrial transfer opportunities from overseas giants to build production capacity in Malaysia. Furthermore, according to the company's plan, the two new factories purchased overseas will gradually be put into operation during the year, and revenue corresponding to overseas production capacity can increase to 200 million.
Increased investment in research and development. The main downstream applications of the company's products are in the semiconductor field. Higher process requirements bring higher levels of cleanliness requirements to ensure normal production and yield of the process, so there is a need for continuous product development and upgrading. The company's R&D expenses for 23 years were 701.12 million yuan, +35.6% year-on-year.
1Q24 continues to demonstrate the increase in profitability brought about by the increase in the share of consumables/overseas expansion.
1Q24's comprehensive gross margin/net margin reached 30.4%/13.0%, respectively, +0.9pct/+0.6pct year-on-year, respectively.
Profit Forecasts, Valuations, and Ratings
We expect the company to achieve net profit of 2.3/30/40 billion yuan from 2024 to 2026, and EPS of 1.69/2.24/2.97 yuan, respectively. The corresponding PE is 19 times, 14 times, and 11 times, respectively, maintaining a “buy” rating.
Risk warning
The rise in additional production capacity fell short of expectations; downstream demand fell short of expectations; the risk of lifting the ban on restricted stocks, etc.