The company published its annual report for '23 and its quarterly report for '24:

In 2023, the company's comprehensive gross margin increased steadily, and profitability increased simultaneously. In '23, we achieved revenue of 1,717 billion yuan, +23.98% year on year, net profit of 251 million yuan, +25.21% year on year, net profit after deducting non-return to mother of 187 million yuan, +36.37% year on year. The gross profit margin was 42.53%, an increase of 4.13pcts compared to last year. The cost ratio for the period was 30.79%, which was basically the same. As of the end of 2023, the company's on-hand orders (tax included) amount to approximately 2.2 billion yuan.

The pace of receiving orders in the early stages led to negative growth in Q1 revenue, high superposition costs, and significant pressure on Q1 performance.

In Q1 2024, the company achieved revenue of 244 million yuan, a year-on-year decline of 15.27%. The main reason was that the second half of the year's new orders was better than the first half of the year, and factors such as stock order structure, production delivery and acceptance cycle had an adverse impact on revenue. In addition, the company's Q1 employee compensation expenses increased 35% year over year, share payment expenses increased 266% year over year, and software value-added tax rebates received fell 43% year over year. Multiple factors combined to cause a significant decline in performance.

In terms of products, by the end of 2023, ArF submersible machines had received orders from five important domestic customers. In terms of front-end cleaning machines, a new generation of high-capacity physical cleaning machines have been verified by important domestic storage clients, and new chemical cleaners have also received verification orders from important domestic customers, which is expected to become a new growth point for the company's performance. In the field of advanced packaging, the company achieved product sales to many overseas customers during the reporting period, and actively deployed new products for the chiplet market, including temporary bonding, unbonding, frame cleaning, etc., and achieved good order signing performance.

Profit forecast and investment advice: We expect the company's 24-26 revenue to be 21.21, 30.43, and 38.09 billion yuan, up 23.55%, 43.44%, and 25.17% year on year, and net profit of 3.02, 4.69, and 616 million yuan, with year-on-year growth rates of +20.54%, 55.22%, and 31.40%, corresponding to 24-26 PE of 46/29/22X, maintaining the “recommended” rating.

Risk warning: New product development progress falls short of expectations, risk of equipment verification falling short of expectations, risk of increased market competition, geopolitical risks, etc.