Downstream demand slowed in '23, and the profit side was under pressure in the short term due to high R&D investment. Changchuan Technology released its annual report for 2023 and quarterly report for 2014. The company achieved operating income of 1,775 billion yuan, or -31.1% year over year. The decline in the company's revenue was mainly due to the cyclical impact of the semiconductor industry and global macro environment, and downstream customer demand slowed; net profit to mother was 45,159,600 yuan, -90.2% year on year, net profit after deduction of 76.5571 million yuan, or -119.4% year on year. Profit side pressure was mainly due to the company increasing R&D investment in high-end testing equipment and actively exploring the high-end market. R&D expenses reached 715 million yuan, +10.9% YoY, R&D expenses The rate reached 40.3%, +15.3pcts year over year. The company achieved operating income of 566 million yuan in a single quarter in the 23Q4 quarter, +26.6% year on month, net profit of 43.8339 million yuan, -67.7% year on month, reversal of losses from month to month, net profit of 30.3542 million yuan without return to mother, -77.1% year on year, reversing losses from month to month, and a recovery compared to Q3 results.
The 24Q1 revenue performance was impressive, and the profit side reversed losses year over year. The company achieved operating income of 559 million yuan in 24Q1, +74.8% year-on-year, -1.2% month-on-month. The first quarter was a traditional off-season. In 21/22/23, the company's Q1 revenue accounted for about 18%/21%/20% of that year's revenue. 24Q1 revenue recorded a record high in Q1, with impressive revenue performance; net profit to mother was 4,0752 million yuan, reversing loss +107.1% year on month, -90.7% month-on-month, net profit of 16.257 million yuan, year-on-month reverse loss of +102.4%, and -4.96% month-on-month.
Continue to vigorously invest in high-end R&D, and equipment ASP bucked the trend. R&D investment in 2023 reached 7.9 yuan, accounting for 44.38% of revenue. The company continues to explore the high-end market. As of December 31, 2023, the company has authorized 843 patents (including 341 invention patents) and 63 software copyrights. R&D personnel account for 54.51% of the company's total number of employees, and core technicians have rich experience in the semiconductor testing equipment industry. On the product side, on the basis of maintaining the market position of existing pan-analog equipment, the company focused on developing related sealing and testing equipment such as probe benches, high-end testing machine products, three-temperature sorters, AOI optical inspection equipment, etc., broadening the product line and actively exploring the middle and high-end markets. After successfully developing new high-end products, the company's products covered the three main test equipment blocks of testing machines, probe stations, and sorters.
Based on the company's total revenue/number of sales machines, the company's ASP was about 1.55 million yuan in 2022 and 1.74 million yuan in 2023. The ASP upgrade was achieved despite weak downstream demand, which shows that the company's high-end strategy is progressing smoothly.
The SoC class and storage test systems market resumed growth. According to global test system leader Edwin, in 2023, the global SoC test equipment market was about 33-3.4 billion US dollars, and storage test equipment was about 1.1 billion US dollars. Due to delays in the recovery of demand for major consumer electronics products such as smartphones and PCs, demand for semiconductor test equipment was weak in 2023. Driven by HPC/AI, Edwin expects the SoC test equipment market to grow to $33-3.6 billion in 2024. The company anticipates that demand for high-performance DRAM test equipment may grow rapidly. Test equipment related to non-volatile memory will gradually recover from 2024H2, and the storage test equipment market will increase to 1.3 billion US dollars in 2024. After years of R&D and accumulation, Changchuan Technology has become a leading domestic supplier of special test equipment for integrated circuits, and is actively exploring the middle and high-end markets. We expect the company to achieve revenue of 32.5/43.2/5.18 billion yuan in 2024-2026 and net profit of 5.2/8.5/98 billion yuan, maintaining the “Highly Recommended” rating.
Risk warning: New product development falls short of expectations, downstream demand falls short of expectations, industry competition intensifies