Key points of investment
Incident: In 2023, the company achieved revenue of 793 million yuan, -12.07%; achieved net profit of 191 million yuan, or -30.13% year on year; achieved revenue of 199 million yuan, -16.29% year over year in Q4; realized net profit of 35 million yuan, or -33.31% year on year. In 2023, the company plans to distribute a cash dividend of 6 yuan (tax included) for every 10 shares to shareholders. In Q1 2024, the company's revenue was 225 million yuan, +4.08% year on year; net profit to mother was 60 million yuan, +8.63% year over year.
Demand in the consumer electronics sector will slow in 2023, but pre-research projects are expected to gradually expand in the future. In 2023, due to fluctuations in the consumer electronics cycle, the company's revenue in the precision welding equipment sector and machine vision process equipment sector declined year-on-year. However, judging from the number of NPI pre-research projects in progress, the major customer business will have upward elasticity in 2024, and it is expected that related sectors may recover. As major customers promote global development, demand for equipment in Vietnam and other places has increased markedly, and the company is actively improving overseas business capabilities. At the same time, the selective wave soldering equipment independently developed by the company was recognized by the market and received orders from leading car companies such as BYD.
The new business is growing well. In 2023, the company's revenue for complete intelligent manufacturing equipment was +26.68% year-on-year, and intelligent driving production line businesses such as lidar and millimeter wave radar grew. Solid crystal bonding and packaging equipment revenue +57.40% year over year. The high-speed eutectic die bonder equipment has completed customer verification and entered mass production. At the same time, the company actively lays out research and development in fields such as advanced packaging and high-end crystal solidification machines. Furthermore, the trend of silicon carbide being launched is expected to drive demand for related packaging equipment. The company has developed its own micro-nano metal sintering equipment, which has been tested for dozens of silicon carbide packaging companies, and some customers have already shipped it.
2024Q1 strengthens cost control and increases profitability. Due to factors such as changes in sector structure, gross sales margin declined year-on-year for the full year of 2023/2024Q1, but remained at a high level of 47.30%/49.51%. In 2023, the company focused on promoting new semiconductor equipment products. The sales cost rate was +0.76pct; the management fee rate decreased; the company invested heavily in the semiconductor equipment field, and the R&D cost rate increased to 13.93% year on year; overall, the net interest rate to mother was 24.10%. 2024Q1, the company's sales/management/R&D expenses rate decreased year-on-year, investment income increased, and net interest rate to mother +1.11 to 26.56% year-on-year.
The balance ratio is relatively healthy, and cash flow management is relatively steady. At the end of the first quarter of 2024, the company's balance ratio was 21.68%, and monetary capital/transactional financial assets accounted for 10.15%/36.25% of total assets. For the full year of 2023/2024Q1, the company's operating cash flow was 210 million yuan/58 million yuan, respectively, accounting for 26.46%/25.61% of revenue; cash received from sales of goods and provision of services accounted for 112.98%/111.58% of revenue.
Investment suggestions: The company has outstanding advantages in the precision welding and assembly equipment industry and is expected to benefit from new consumer electronics demand driven by AI innovation; at the same time, it develops and promotes semiconductor packaging equipment to build a new growth curve; the complete equipment business for new energy vehicle electronics is also expected to grow steadily. We adjusted the 2024/2025 net profit forecast (previous value was $2.83/375 million yuan) and introduced the 2026 forecast. The company's net profit for 2024-2026 is estimated to be 2.62/3.49/452 million yuan, and the estimated EPS is 1.05/1.39/1.80 yuan, corresponding PE is 20X/15X/11X, maintaining the “buy” rating.
Risk warning: macroeconomic and market demand falls short of expectations; industry competition increases risks; equipment verification falls short of expectations.