Introduction to this report:
Due to the recovery in market demand, the company's profits have been significantly recovered from quarter to quarter. With the recovery in market sentiment, the expansion of new customers, and the release of new production capacity expansion, there is plenty of room for future growth.
Key points of investment:
Maintain an increase in holdings rating. The semiconductor market bottomed out in 2023, and 1Q24 company performance recovered significantly year over year. Considering that industry sentiment has not fully recovered, the company's production and operation target for 2024 is to achieve revenue of 25.2 billion yuan. We slightly reduced the company's 2024-2025 EPS performance to 0.53/0.83 (original value 0.56/0.88), and added 2026 EPS of 1.07 yuan. The company is deeply tied to AMD and is expected to benefit from the expansion of the MI200 and MI300 series. It is optimistic about the company's growth in the AI field. Considering that the average valuation of the sealed testing industry is 40 times PE, a certain valuation premium will be given, 57 times PE in 2024, maintain a target price of 30.27 yuan, and maintain an increase rating.
The 2024 Q1 results were recovered year on year, and investment continued to expand production in 24 years. The company achieved revenue of 5.282 billion yuan in 2024, +13.8% year-on-year. Net profit attributable to mother reached 98 million yuan, turning a year-on-year loss into a profit, a significant increase of +2064%. As the semiconductor market bottoms out and rebounds, the company will control traditional packaging capital expenses and vigorously expand the scale of advanced packaging in 2024. The company will continue to invest in production expansion. The company and its control enterprises plan to invest a total of 4.89 billion yuan in facility construction, production equipment, IT, technology research and development, etc., to actively prepare for industrial recovery and expansion of the closed testing landscape.
The company plans to acquire 26% of Jinglong Technology's shares, and advanced testing can be expected in the future. The company announced that it intends to acquire 26% of Jinglong Technology's shares held by Jingyuan Electronics. Jinglong Technology specializes in advanced testing and packaging, including wafer needle testing, IC product testing, and wafer grinding/cutting/grain picking. In 2023, Jinglong Electronics had a net profit of 423 million yuan. Through the acquisition of 26% of its shares, the company is expected to increase investment returns and lay the foundation for expanding the advanced testing landscape.
Catalysts: The company's operating rate is picking up; the volume of new production bases is being released.
Risk warning: The company's new product release falls short of expectations; market demand falls short of expectations.