The company announced S2023 results, with operating income of 1.21 billion yuan (-18.4% YoY) and net profit of 134 million yuan (YoY -45.6%), of which 23Q4 revenue was 276 million yuan (-5.25% YoY) and net profit to mother was 0.36 million yuan (-3.3% YoY); the company announced results for the first quarter of 2024, with 24Q1 operating income of 328 million yuan (+19.8% YoY) and net profit to mother of 34 million yuan (YoY +144%). The company plans to distribute a cash dividend of 4.50 yuan (tax included) for every 10 shares.
Comment:
The display materials business is under pressure in 2023, and deuteration of OLED materials can be expected in the future. In 2023, the company's display materials sector achieved sales revenue of 1.03 billion yuan, a year-on-year decrease of 17%, mainly driven by the decline in LCD materials products. The display materials sector achieved a gross profit margin of 33.2%, a year-on-year decrease of 2.5 pcts.
The development trend of OLED display materials is good. The scope of “deuteration” of OLED products has been further expanded. The number of orders over 500 kg has been reduced, the number of orders over 50 kg has increased dramatically, new product projects, especially pilot projects, have further increased, and the company has many potential release products. In the future, the company will continue to iterate technology in the field of OLED materials, dig deeper into breakthroughs in deuterium generation technology, and consolidate the leading position of materials before sublimation in the industry.
The company has a rich electronic chemical product line, focusing on PI and PSPI's new product development. Affected by the downturn in the semiconductor industry and the long verification cycle for new products, the company's electronic chemicals sector achieved sales revenue of 40 million yuan in 2023, a decrease of 15% over the previous year. The company's electronic chemicals are the company's second growth curve in the future. Products include semiconductor photoresist monomers, film material monomers, PI monomers, TFT flat layer photoresists, etc. In the future, the company will take advantage of monomer synthesis and purification, summarize and continuously improve experiences and breakthroughs in metal ion control, increase market development, promote the gradual extension and development of photoresist products to resin mass production technology processes, and focus on the development of new PI and PSPI products.
The gross margin of the pharmaceutical CDMO business remains high. In 2023, the company's pharmaceutical CDMO segment's sales revenue was 136 million yuan, down 25% year on year, achieving a gross profit margin of 55.8%, and maintaining a high level.
At the end of 2023, the company had 207 pharmaceutical pipelines, a net increase of 67 over the same period last year. The first phase of the API project has reached the intended state of use, and the first application for a marketing license for an API product is being processed.
Investment advice: We expect the company's revenue for 2024-26 to be 15.5/19.2/2.18 billion yuan (an increase of 2.18 billion yuan in 26 years), net profit to mother of 2.18/2.84 billion yuan (an increase of 341 million yuan in 26 years), and corresponding PE is 22X/17X/14X, respectively, maintaining a “buy” rating.
Risk warning: Production fell short of expectations, raw material prices fluctuated, and market demand fell short of expectations