Incident: Zhongke Flying Survey released its 2023 annual report and 2024Q1 quarterly report. For the full year of 2023, the company achieved revenue of 891 million yuan, an increase of 74.95% year on year; net profit to mother was 140 million yuan, an increase of 1072.38% year on year. 24Q1 achieved revenue of 236 million yuan, a year-on-year increase of 45.60%; net profit to mother was 34 million yuan, an increase of 9.16% over the previous year.

Maintaining high R&D investment, the product line and process coverage continued to expand: in 2023, the company invested 228.2498 million yuan in R&D, an increase of 10.93% over the previous year. With the support of abundant R&D expenses, the company's measurement and inspection equipment technology research and industrialization are progressing smoothly. The core products already include various devices such as non-graphic defect detection, bright/dark field nano-defect detection, three-dimensional morphology measurement, film thickness inspection, and overlay accuracy measurement.

Overlay measurement equipment effectively supports the lithography process: Zhongke Feisei's overprinting accuracy measurement equipment has been sold in batches, with orders growing rapidly, and its market share is steadily increasing; Zhongke Feisei's overprinting equipment still maintains high stability and high accuracy after going through a multi-layer lithography process in the logic chip manufacturing process; in the field of memory chips, it can measure the lithography offset on ultra-thick photoresist, effectively solving the lithography process problems caused by the high depth and width ratio structure of the storage process.

The development of brightfield/dark field nanodevices is steady and orderly: bright/dark field nanodevices can detect defects in complex circuit patterns, and are quantitative inspection devices with extremely high technical barriers. The company has now completed the development of prototypes of brightfield nano devices, is actively testing samples, and is shipping small batches to customer production lines for process development and application verification, which is progressing smoothly. Dark field equipment prototypes have also been completed, and verification tests of various complex graphics process samples from many mainstream domestic customers are being actively carried out.

Investment suggestion: Based on the R&D and mass production progress of various equipment from Zhongke Fei, we expect the company to achieve operating income of 12.82/18.16/2,415 billion yuan in 2024-2026 and net profit of 2.01/2.88/430 million yuan, corresponding to PE of 78.76/55.02/36.80 times, maintaining the “increase” rating.

Risk warning: Industry prosperity is declining; customer demand is slowing down; R&D progress falls short of expectations; industry competition intensifies.