Incident: Dinglong Co., Ltd. released its report for the first quarter of 2024: in the first quarter of 2024, the company achieved revenue of 708 million yuan, yoy +29.5%; net profit to mother of 81.5758 million yuan, yoy +134.86%; net profit after deducting non-return to mother of 658.47,800 yuan, yoy +213.71%.
Comment: 24Q1 The company's product verification, introduction, and deployment progressed steadily, and its performance increased year-on-year. As a leading domestic supplier of CMP polishing pads, the company continues to have an advantageous position in the domestic market, and sales of products such as PI paste, CMP polishing liquid, and cleaning liquid continue to increase. The development of new products has further enriched the company's semiconductor material product line and expanded the company's advantages in the localization route of high-end semiconductor materials. We are optimistic that in the future, optoelectronic semiconductor materials will become the company's main growth engine, which is expected to drive the company to grow into a high-end materials platform-based enterprise.
1. 24Q1 performance increased year over year, and gross profit increased significantly year over year.
(1) Higher year-on-year performance: In the first quarter of 2024, the company achieved revenue of 708 million yuan, yoy +29.5%; net profit to mother of 81.5758 million yuan, yoy +134.86%; net profit after deducting non-return to mother of 658.47,800 yuan, yoy +213.71%. (2) Increase R&D investment: The company continued to increase R&D investment. The 24Q1 R&D investment amount was 105 million yuan, an increase of 20.38% over the previous year. (3) Sales of various products progressed smoothly, and gross profit increased sharply year on year: the company's 24Q1 sales increased year on year. Q1 gross margin reached 44.26%, +9.62 pct year on year, and +4.56 pct month on month. This is the company's quarterly gross margin record high in recent years, and the company's profit level has further increased.
2. The CMP polishing pad business is expected to continue to expand quarterly, and CMP polishing liquid and cleaning liquid are progressing steadily.
(1) Continuous quarterly release of CMP polishing pads: 24Q1 Company achieved sales revenue of 135 million yuan, an increase of 110.08% over the previous year, laying a good foundation for the continuous quarterly sales of the polishing pad business this year. (2) The company has continued to enrich the CMP polishing pad product category last year, optimizing yield and improving efficiency. The autonomy of raw materials has also been broken through. The sales scale of the company's CMP polishing pad products is expected to continue to grow. (3) The quantity and introduction verification of various types of CMP polishing liquid and cleaning liquid products progressed steadily. In 24Q1, product sales revenue increased sharply by 206.00% year-on-year and 24.31% month-on-month.
3. Pan-semiconductor materials are steadily advancing verification, and the market advantage of general consumables for printing and copying is stable.
(1) Semiconductor display materials: Semiconductor display materials such as yellow polyimide paste YPI and photosensitive polyimide PSPI achieved a 436.49% year-on-year increase in sales revenue, and new product verification progressed according to plan. (2) Acquisition of part of the shares of the holding subsidiary Rouxian Technology: After the acquisition is completed, the company's shareholding ratio of Rouxian Technology was changed from 70% to 82%, which is expected to further enhance the company's future profitability. (3) Advanced packaging materials and photoresist business: The company promoted the verification and introduction of high-end wafer photoresists and semiconductor advanced packaging materials businesses in an orderly manner in 24Q1. Currently, it has not obtained sales revenue. The company's profit level has had a slight impact, but it has laid a solid foundation for the company's future business development. (4) General consumables sector for printing and copying: 24Q1 product sales revenue remained flat and increased slightly year-on-year, business conditions remained stable, and special work such as management optimization, efficiency improvement, cost reduction and fee control continued.
4. Investment advice: We are optimistic that in the future, optoelectronic semiconductor materials will become the company's main growth engine, driving the company to grow into a high-end materials platform-based enterprise. Taking into account changes in downstream demand and the risk of the impact of the international situation, we adjusted the profit forecast for Dinglong Co., Ltd., with a revenue forecast of 32.77/38.55 billion yuan (original value of 3,909/4.532 billion yuan), an additional 26-year revenue forecast of 4.429 billion yuan; 24-25 net profit forecast of 446/718 million yuan (original value of 672/817 million yuan), and an additional 26-year net profit forecast of 881 million yuan to maintain the “buy” rating.
Risk warning: Competition in the printing and copying supplies industry intensifies; downstream demand falls short of expectations; project progress falls short of expectations; new business development falls short of expectations.