Core views:
Revenue growth was steady in '23, and net profit exceeded expectations. In '23, the company achieved operating income of 1,207 billion yuan, +23.82% year over year; net profit to mother of 177 million yuan, +130.45% year over year; net profit after deducting non-return to mother of 163 million yuan, +173.48% year over year. Among them, 23Q4 achieved operating income of 322 million yuan, +0.43% year on year; realized net profit of 50 million yuan to mother, +73.98% year over year. At the same time as revenue grew steadily, the company increased its control on the cost side. The cost ratio was -3.5 pct to 19.6% year on year. Among them, sales, management, R&D, and financial expenses were 4.2%/4.9%/10.0%/0.5%, respectively, and -1.7 pct/-0.7 pct/-0.8 pct/-0.2 pct year over year. In addition, the company received 50 million yuan in government subsidies that include current profit and loss, +79.3% over the same period. The above reasons have caused the company's annual net profit to grow more than expected, and it is expected that it will continue to benefit from refined management in the future.
24Q1 revenue continued to grow, and high procurement expenses reduced operating cash flow. 24Q1 achieved operating income of 349 million yuan, +30.61% year over year; net profit to mother of 46 million yuan, +11.25% year over year; net profit after deducting non-return to mother was 45 million yuan, +12.04% year over year. Net cash flow from operating activities changed from positive to negative year over year, mainly due to reduced receipts for current sales products and higher payments for purchases. Fluctuations in a single quarter fall within the normal operating category.
New orders continue to grow, and fund-raising production capacity is expected to be released centrally in '24. According to the announcement of the company's bid winning notice, the order amounts publicly disclosed by the company in 21-23 were 4.2, 3.4, and 990 million yuan respectively. In February '24, the company received another order of 130 million yuan for AMOLED module line equipment.
According to the company's financial report, the company has a total of seven fund-raising projects, including flat panel display equipment, AOI testing, semiconductor packaging and testing equipment, and large TV modules, which reached the scheduled state of use in 24 years.
Profit forecasting and investment advice. We expect the company's net profit to be 2.41/315/406 million yuan in 2024-2026, respectively. Considering the company's high orders in the display panel sector, we gave the company a PE valuation of 30 times in 2024, corresponding to a reasonable value of 40.70 yuan/share per share, maintaining a “buy” rating.
Risk warning. Macroeconomic risks, the risk of production expansion falling short of expectations, and industry competition exacerbates risks.