Incident Overview
On April 19, 2024, Tianzhun Technology released its 2023 annual report: in 2023, it achieved operating income of 1,648 million yuan, an increase of 3.70% over the previous year; net profit to mother was 215 million yuan, an increase of 41.46% year on year. The main reasons were: a) the company's revenue and gross margin increased, and the increase in expenses during the period decreased sharply; b) the return on the disposal of long-term equity investments in the current period. Gross margin was 41.66%, up 1.11pct year on year; net margin was 13.06%, up 3.49pct year on year. Among them, revenue for the fourth quarter of 2023 was 769 million yuan, down 2.17% year on year and up 110.58% month on month; net profit to mother was 174 million yuan, up 42.25% year on year, up 373.19% month on month; gross margin for the fourth quarter was 43.05%, and net profit margin was 22.63%.
On April 26, 2024, Tianzhun Technology released its report for the first quarter of 2024: operating income for the first quarter was 193 million yuan, an increase of 6.20% over the previous year; net profit to mother was -38 million yuan, a year-on-year decrease of 13.63%. The gross margin for the first quarter was 39.45%, down 0.32pct year on year; net margin was -19.66%, down 1.28pct year on year.
In 2023, there was a high increase in visual process equipment & intelligent driving solutions. Overall, the company's visual inspection equipment and visual measurement equipment accounted for more than 30% of revenue. Among them, inspection equipment increased 14.6% year on year and measurement equipment decreased 29.02% year on year; visual process equipment and intelligent driving solutions both grew by more than 60% year on year, making them the two fastest growing businesses.
The company improved quality and efficiency, and the overall gross margin of the business increased by 1.11 pct compared to last year. Among them, the intelligent driving scheme increased by 13.26 pcts, and the visual process equipment increased by 11.54 pcts. The company's strategic product matrix was basically formed, and the increase in R&D expenses dropped sharply. The total cost and R&D expenses during the period decreased by 0.96 pct year-on-year.
Platformization continues to advance, and products are continuously improving towards diversity and high-end 1. Semiconductors: Suzhou Silicon Semiconductor, in which the company is a shareholder, has made significant progress. Its first brightfield testing device TB1000 for microscopic defect detection in the front of semiconductors was delivered to customers for trial in August 2023. German subsidiary MueTec will launch overlay products for 40 to 65nm nodes in 24Q2, continuing to maintain its leading edge in fields such as Mask optical CD measurement.
2. Photovoltaics: The company's fully automatic copper grid graphic exposure equipment in November 2023 can match cost-effective overall solutions for R&D lines, pilot lines, and mass production lines. The stand-alone production capacity can reach more than 8,000 PCS/H, and the line width resolution can reach within 10 μm. Leading customers in the equipment delivery industry carried out batch verification on site. At the same time, the key technical indicators of photovoltaic silicon wafer inspection and sorting equipment continue to be optimized.
3. Consumer electronics: The company's visual measurement equipment products and mobile phone cover glass visual inspection equipment all surpassed or reached the level of advanced international peers in terms of main indicators, achieving domestic replacement.
4. PCB: In 2023, a complete business layout with 4 product lines was formed: PCB laser direct imaging equipment released a new 4 μm high-precision model, and equipment sales increased steadily. Among them, the cumulative order amount for newly launched LDI equipment for the solder mask layer exceeded 100 million yuan; PCBAOI/AVI equipment was sold in bulk in 2023; PCB laser drilling equipment has begun to be sold; and the newly developed high-speed patch machine has been delivered to customers for trial in 2023.
5. Automobile: In the field of intelligent driving, the company's autonomous driving domain controller products based on the Horizon Journey Journey 5 chip made breakthrough progress in 2023, and have obtained targeted intelligent driving domain controller development projects and concept verification projects from OEMs such as GAC and SAIC Motor. The company continues to develop its edge computing business based on Nvidia Jetson chips, and has already implemented various application scenarios such as unmanned logistics vehicles, intelligent connectivity, low-altitude economy, and physical intelligence.
Investment advice
Considering that the consumer electronics repair process is slightly slower than expected and the PV industry's acceptance schedule is delayed, we lowered the profit forecast and predicted that the company's 2024-2026 operating income would be 19.61/23.28/2,655 billion yuan (2,490/3.120 billion yuan before the 2024-2025 adjustment), respectively, and net profit attributable to mother of 2.62/315/386 million yuan (286/343 million yuan before the 2024-2025 adjustment), based on the current total share capital of 192 million shares EPS is 1.36/1.64/2.01 yuan. The company's current stock price is 27/22/18 times the PE multiples for the 2024-2026 forecast EPS, respectively, maintaining a “buy” rating.
Risk warning
1) Market competition increases risk. 2) New business development falls short of anticipated risks. 3) The risk of changes in the macroeconomic and international trade environment. 4) The risk of errors in estimating market space. 5) The risk that the information based on the study was not updated in a timely manner and did not fully reflect the company's latest situation.