Incident: The company announced that it would achieve revenue of 3.98 billion yuan in 2023, a year-on-year increase of 44.64%; net profit of 214 million yuan, a decrease of 14.70%; deducted non-vested net profit of 210 million yuan, a decrease of 10.97%; and proposed dividends for the full year of 2023.1.

09.7 billion yuan (including a semi-annual cash dividend of 26.125 million yuan), and the cash dividend ratio reached 51.28%.

There are plenty of orders on hand, and future income is guaranteed. The current round of domestic substitution in the semiconductor industry and the rapid expansion of advanced production capacity of new photovoltaic energy sources are driving demand in the clean room industry. The company signed new orders of 4.95 billion yuan in 2023, an increase of 48.2%. Among them, the amount of new contracts in the semiconductor and pan-semiconductor industry increased by 69.74%.

By the end of 2023, the amount of the company's on-hand orders (revenue portion not yet confirmed) was 2.87 billion yuan, an increase of 57.9%. Among them, semiconductors and pan-semiconductors, novel displays, life science, and food and drug health each accounted for 78 percent.

1%/13.0%/8.2%. The company's main revenue is expected to continue to be contributed by semiconductor and pan-semiconductor customers in 2024.

Expense ratios have declined, and gross margin and asset impairment losses are under pressure. The company achieved a gross profit margin of 11.43% and a decrease of 3.24pct in 2023; the period expense ratio of 2.77% decreased by 1.11pct. Among them, the company's sales/management and R&D/finance expense ratios were 0.66%/2.84%/-0.73%, respectively, a decrease of 0.01pct/0.45pct/0.65pct respectively. Among them, the sharp decline in financial expenses was due to the availability of funds raised from the listing to generate interest on deposits; the asset and credit impairment loss rate increased by 1.60% and 2.48pct, and the impairment loss rate growth rate in 2022 is: 1) Long-term account aging in 2022 Accounts collected a lot. 2) The scale of business was expanded, and the scale of unsettled contract assets increased by 78%, and preparation for bad debts increased by 46.464 million yuan. As a result, net profit for the current period decreased by 34.92 million yuan compared to the same period last year; the net profit ratio of 5.38% decreased by 3.74 pct. The company's net operating cash flow in 2023 was 214 million yuan, less than the previous year's inflow of 0.3 billion yuan; the revenue ratio decreased 15.87 pcts from 87.04%; and the current payment ratio decreased 15.51 pcts from 81.84%. As of the end of 2023, the size of the company's accounts receivable and notes, inventory+contract assets, accounts payable and notes, accounts receivable plus contract liabilities were $6.1/18.1/2.08/0.7 billion, respectively, a year-on-year change of -4.65%/88.05%/55.17%/1.30% from the beginning of the year.

Investment advice: We predict that the company's net profit for 2024-2026 will be 2.62/3.29/416 million yuan, a year-on-year growth rate of 22.25%/25.88%/26.45%. The latest closing price corresponding to 2024-2026 PE will be 21.3/16.9/13.4 times, respectively, maintaining the “gain” rating.

Risk warning: Order release falls short of expectations, downstream demand falls short of expectations, risk of macroeconomic environment fluctuations.