Incident: Xinyuanwei released its 2023 annual report and 2024Q1 quarterly report. In 2023, the company achieved revenue of 1,717 billion yuan, an increase of 23.98%; net profit to mother was 255 million yuan, an increase of 25.21%; 2024Q1 achieved revenue of 244 million yuan, a year-on-year decrease of 15.27%, and net profit to mother of 16 million yuan, a year-on-year decrease of 75.73%

Multiple factors affect the company's 2024Q1 performance: Affected by factors such as customer order pace, production delivery and acceptance cycle, the company's 2024 Q1 revenue is under short-term pressure. In addition, the company's 2024Q1 software tax rebate revenue fell 43% year on year, employee compensation expenses increased 35% year on year, and share payment fees rose 266% year on year, affecting the company's profit for the quarter.

The company's glue-coated imaging equipment business is progressing steadily: the company has launched various models of products, including offline, i-Line, KrF, and ArF submersible products. In 2023, the company signed new orders for glue-coated imaging equipment to maintain a good growth rate, and the process level of some models of equipment can already be compared to mainstream international machines. The company's ArF immersion high-capacity gluing and imaging equipment has made good progress in maturity and standardization, and has received orders from 5 important domestic customers. Xinyuanwei has also made good progress in sales of new machines such as high-end NTD negative imaging and SOC coating, further expanding the process application scenarios and market space of the company's glued imaging equipment.

Aiming at the advanced packaging market, new equipment was launched: The company's later advanced packaging gluing equipment and single-chip wet processing equipment have been used as mainstream models in batches for many years in first-tier manufacturers such as TSMC, Shenghe Jingwei, Changdian Technology, Huatian Technology, Tongfu Microelectronics, etc., and has become the preferred brand for many well-known customers. Some technical indicators have reached leading international levels and have been continuously recognized by many overseas customers. Focusing on 2.5D/3D advanced packaging technology, Xinyuan Micro also successfully launched products including temporary bonding, unbonding, and frame cleaning.

Investment advice: Taking into account the development status of the domestic semiconductor industry and the company's technology research and development progress, we expect the company's revenue from 2024 to 2026 to be 23.73/31.94/4.163 billion yuan, and net profit to mother will be 3.73/5.25/ 602 million yuan respectively, corresponding to PE of 35.80/25.42/22.17 times, maintaining the “increase” rating.

Risk warning: Overseas supply chain risks; domestic fab equipment procurement is slowing down; high-end product development progress falls short of expectations; industry competition intensifies.