Incident: North China Huachuang released its 2023 annual report and 2024Q1 quarterly report. In 2023, the company achieved revenue of 22.079 billion yuan, a year-on-year increase of 50.32%; net profit to mother was 3,899 billion yuan, 65.73% year over year; 2024Q1 achieved revenue of 5.859 billion yuan, an increase of 51.36% year on year, and net profit to mother of 1,127 billion yuan, an increase of 90.40% year on year.
The semiconductor equipment business is strong, and the product range is rich: North Huachuang's main products include core process equipment such as etching, thin film deposition, furnace tubes, cleaning, and crystal growth, which are widely used in manufacturing fields such as integrated circuits, power semiconductors, 3D integration and advanced packaging, compound semiconductors, novel displays, new energy photovoltaics, and substrate materials. In the field of integrated circuit equipment, the company has successfully developed a variety of high-end devices with independent intellectual property rights, achieved stable mass production by many customers, and received unanimous praise from customers.
Vacuum and lithium battery equipment supports green manufacturing: In the vacuum and lithium battery equipment business sector, North China Huachuang is deeply involved in high pressure, high temperature, and high vacuum technology to develop monocrystalline silicon crystal growth equipment, vacuum heat treatment equipment, atmosphere protection heat treatment equipment, continuous heat treatment equipment, magnetron sputtering coating equipment, and multi-arc ion coating equipment.
The above equipment is widely used in the fields of material heat treatment, vacuum electronics, new energy photovoltaics, semiconductor materials, magnetic materials, new energy vehicles, etc., and provides technical support for new materials, new processes, and new energy sources.
The gross margin trend of components and equipment business is the opposite: in 2023, the gross profit margin of Beifang Huachuang Electronic Equipment was 38.04%, up from 37.70% in 2022, which shows that the company's electronic equipment continues to move towards high-end. The gross profit margin of electronic components was 65.65%, a slight decline compared to 72.53% in 2022; revenue also fell from 2,574 billion yuan in 22 to 2,433 billion yuan in 2023. In summary, the share of revenue and profit in the electronic equipment business continues to increase.
Investment advice: Taking into account the impact of overseas restrictions on the company's important customers, industry sentiment, and new product development progress, we expect the company's net profit to be 60.19/76.16/9.337 billion yuan respectively from 2024 to 2026, corresponding to PE of 28.14/22.24/18.14 times, maintaining the “gain” rating.
Risk warning: semiconductor market sentiment is declining; overseas supply risks; domestic demand for semiconductor equipment is slowing down; high-end equipment R&D progress falls short of expectations; industry competition intensifies.