Incidents:
On April 24, 2024, Jiang Feng Electronics released its 2024 quarterly report: the company achieved operating income of 772 million yuan in the first quarter of 2024, an increase of 36.65% over the previous year; net profit after deducting non-return to mother was 70.1832 million yuan, an increase of 94.64% over the previous year.
Comment:
The company's revenue for the first quarter of 2024 increased 36.65% year on year, net profit after deducting non-return to mother increased 94.64% year on year, and Q1 performance exceeded expectations. In the first quarter of 2024, the company achieved revenue of 772 million yuan, a year-on-year increase of 36.65%, an increase in sales scale, and a volume of customer orders. The gross margin was 31.97%, up 0.17pct year on year and 2.98pct month-on-month, mainly due to the gradual recovery of the downstream semiconductor industry. The company's advance payments from customers increased, and the 2024Q1 contract debt was RMB 128.731 million, an increase of 54.35% over the previous year. The company attaches importance to technical reserves and continues to increase R&D investment. R&D expenses for the first quarter of 2024 were 554.922 million yuan, an increase of 50.89% over the previous year. Affected by interest expenses on loans and exchange gains and losses, the company's financial expenses were 1,928,800 yuan, a year-on-year decrease of 72.81%. Affected by sales growth and cost control factors, the company's 2024Q1 performance exceeded expectations.
The company has established a diversified product system and business line with ultra-high purity metal sputtering targets as the core, and the joint development of semiconductor precision components and key materials for third-generation semiconductors. With ultra-high purity metal sputtering targets as the core, the company actively promotes projects to expand production of ultra-high purity metal sputtering targets. The company is developing the target material business in the field of flat panel displays. The G11 MoTi target for flat panel displays has entered the mass production stage, and the localization of flat panel display targets is expected to accelerate. Benefiting from the technical experience and customer advantages accumulated in ultra-high purity metal sputtering targets for semiconductors, the company has achieved rapid growth in semiconductor precision components, actively promoted production capacity construction at bases such as Yuyao, Shanghai, Hangzhou, and Shenyang, and comprehensively laid out metallic and non-metallic semiconductor precision components. The company has made progress in the field of third-generation semiconductor materials. High-end copper-clad ceramic substrates have received initial market recognition. They can be widely used in fields such as third-generation semiconductor chips and new high-power power electronic devices, IGBTs, to achieve the joint development of semiconductor precision components and third-generation semiconductor key materials.
The company plans to invest 350 million yuan to build a new semiconductor target production plant in Asan to accelerate the global strategic layout. To achieve the company's global strategic layout, the company plans to build a modern semiconductor material production plant in Korea. In October 2023, the Korean subsidiary KFAM CO., Ltd. completed registration. According to the company's official account, the company has now signed an investment cooperation agreement with the Asan city government in South Korea, and plans to invest 350 million yuan to build a modern semiconductor target manufacturing plant in Asan City. The investment and construction of the Korean factory will accelerate the company's global strategic layout and increase the market share and international competitiveness of the company's products.
Company profit forecast and investment rating: The company is a domestic semiconductor target leader, and the semiconductor component business continues. The company's EPS is expected to be 1.45 yuan, 1.86 yuan, and 2.36 yuan respectively in 2024-2026. Corresponding to the current stock price PE is 32X, 25X, and 20X, respectively, maintaining the “recommended” rating.
Risk warning: (1) downstream demand slows down; (2) business expansion falls short of expectations; (3) trade friction intensifies.