Introduction to this report:
The company's results for the first quarter of 2024 are in line with expectations, and the company will benefit from a recovery in semiconductor demand and optimization of its own production capacity structure. At the same time, demand for computing power may drive rapid growth in demand for the company's related high-end packaging products.
Key points of investment:
The company's Q1 performance in '24 was in line with expectations and maintained an “gain” rating. In 2014, Q1 had revenue of 202 million yuan (qoq +0.72%, yoy +39.46%), gross profit of 82 million yuan (qoq +9.19%, yoy +55.20%), and net profit to mother of 52 million yuan (qoq +5.13%, yoy +79.94%), in line with expectations. Maintain the company's 24-26 EPS to 1.26/1.54/1.75 yuan (growth rate +35/22/ 13%), maintain the target price of 56.43 yuan (44.79X PE in 24 years), and maintain the “gain” rating.
Driven by the explosion of advanced packaging, the recovery of consumer electronics, and the wave of AI, demand for integrated circuits improved dramatically over the same period last year. According to Yole's forecast, the CAGR for global advanced packaging will be 10.6% in 2028, reaching $78.6 billion by 2028. According to Wind, M3 in '24, smartphone production was 118 million units, +0.36% YoY, -11.82% (23Q4 average); IC output was 36.2 billion blocks, +23.05% YoY, +2.58% (23Q4 average); total computer output was 0.31 million units, -10.47% YoY and -1.34% YoY (23Q4 average).
The company's high-end product layout is at the right time. According to investor research records and company announcements disclosed by the company, HBM needs to use high-end spherical silicon and aluminum products. The company already supplies them in batches, and the company also has Ultra Low Df series products suitable for use in M6 and above grade substrates. The company invested in the construction of a 252,000 ton electronic-grade functional powder material project for circuits to optimize the existing production capacity structure. At the same time, the company aimed at the demand for high-frequency high-speed copper-clad plates under the AI wave and laid out a 3,000-ton ultra-fine spherical powder production line construction project for advanced integrated circuits.
Catalysts: Consumer electronics recovery, accelerated deployment of advanced domestic packaging, and bursting demand for computing power.
Risk warning: Market development falls short of expectations, and natural gas prices have risen.