Matters:
On April 23, 2024, the company released the 2023 Annual Report and 2024 Quarterly Report:
1) 2023: The company achieved operating income of 742 million yuan, +11.84% year on year; gross profit margin of 38.35%, -1.22pct year on year; net profit of 1.19/87 billion yuan after deduction, +30.75%/+5.70% year over year;
2) 2024Q1: The company achieved operating income of 219 million yuan, +20.98% YoY, +58.58%; gross profit margin of 35.03%, -5.72pct, -5.27pct month-on-month; net profit to mother of 0.28 million yuan, +16.02% YoY, +1093.02% month-on-month; net profit after deducting net profit of 0.2 billion yuan, -10.90% YoY, turning loss into profit month-on-month.
Commentary:
Performance has grown steadily, and R&D investment has been increased to improve the platform-based layout of semiconductor-specific equipment. The company's market share of temperature control equipment continues to increase+product layout is becoming more and more perfect, and performance has achieved steady growth. By business, in 2023, the company achieved revenue of 461 million yuan for temperature control equipment, +45.42%, gross profit margin of 39.21%, year-on-year -3.96pct; waste gas treatment equipment revenue of 216 million yuan, -4.69% year-on-year, gross profit margin of 42.06%, year-on-year -4.45 pct; the net profit to mother was partly affected by government subsidies and non-operating income. 2024Q1's revenue was +20.98% year-on-year to 219 million yuan, while short-term profit fluctuated due to the company's increased investment in R&D. In the future, as new products are released one after another, the company's performance and profitability are expected to return to a high growth trajectory.
The semiconductor special equipment market is developing rapidly, and the company is expected to continue to benefit from downstream production expansion and the wave of localization.
The expansion of production in fabs continues to advance the process of superimposed integrated circuits. The demand for semiconductor-specific equipment continues to rise, and the size of the semiconductor-specific equipment market is expected to continue to grow. In terms of the competitive landscape, the company ranked first in the domestic semiconductor temperature control equipment market during 2020-2022, reaching 35.73% in 2022; the market share ranking in the domestic semiconductor exhaust gas treatment equipment field also increased from 8th place in 2018 to 4th place in 2022, and the future will continue to benefit from the expansion of fab production and acceleration of localization; at the same time, the company's wafer transfer equipment is expected to achieve rapid deployment in the future with the advantage of localized services.
The company focuses on key core technology research, and a diversified product structure helps long-term development. While iterating the performance of temperature control equipment & exhaust gas treatment equipment, the company continues to promote the platform-based layout of wafer transfer equipment and key components. 2024Q1 R&D investment accounted for +3.68 pct of revenue to 10.21% year-on-year. By product, the company's technical direction of semiconductor-specific temperature control equipment is multi-channel, large load, and full temperature range coverage; semiconductor-specific process exhaust gas treatment equipment mainly focuses on the development of all types of combustion, plasma, electric heating, etc.; wafer transfer equipment is platform-based development based on existing software, algorithms, and core components to comprehensively help the company achieve new breakthroughs in scientific and technological innovation capabilities, and the share of various products is expected to continue to increase in the future.
Investment advice: The company actively lays out wafer transfer equipment and components while continuing to iteratively upgrade existing temperature control and exhaust gas treatment equipment. Considering that the company is still in a high R&D investment stage, we adjusted the company's net profit forecast for 2024-2025 from 1,95/263 million yuan to 1.82/241 million yuan, and the net profit forecast for 2026 was 320 million yuan, corresponding to EPS of 1.08/1.43/1.90 yuan. Considering the company's prominent position in the field of temperature control/exhaust gas treatment equipment for semiconductors, a certain premium was given on a comparable company valuation level, and the company was given 50 times PE in 2024. The corresponding target price was 54.1 yuan, maintaining the “strong promotion” rating.
Risk warning: Changes in the international trade situation; fab production expansion falls short of expectations; technology upgrades and iterations fall short of expectations.