Event Overview: Company Releases 2023 Annual Report and 2024 Quarterly Report [2023]
Revenue was 2,508 billion yuan, up 52%; net profit attributable to mother was 724 million yuan, up 44%; net profit after deducting non-return to mother was 608 million yuan, up 60%; and gross profit margin was 46.02%, down 1.71 pcts.
[23Q4]
Revenue was 668 million yuan, up 30% and 10%; net profit to mother was 160 million yuan, up 1% and 16%; net profit after deducting non-return to mother was 149 million yuan, up 31% and 2%; gross profit margin was 44.80%, down 3.58 pcts and 1.93 pcts.
[24Q1]
Revenue was 680 million yuan, up 10% from the same period; net profit to mother increased 4% and 26%; net profit from non-return to mother was 172 million yuan, up 3% and 15%; gross profit margin was 47.92%, up 1.27 pcts from the same period and 3.12 pcts.
The high increase in CMP has driven a high increase in performance in 23 years. The order pace affected the 24Q1 revenue company as the leading CMP domestic market. With good product power, its equipment continued to increase its share in various customers, such as logic and storage, and continued to break through. Annual CMP equipment sales reached 2,278 billion yuan, an increase of 59%, driving the company's overall revenue and net profit to increase in 23 years.
Affected by the pace of customer orders, the company's new orders in 2023 fluctuated between seasons, making the year-on-year growth rate relatively low after 24Q1 revenue was confirmed. Furthermore, judging from indicators such as products issued and inventory structure, the company's future revenue momentum is good: the company issued 1,136 billion yuan of products at the end of 23, accounting for nearly 46% of the inventory of 2,456 billion yuan. The number of products in stock and products in stock is 1.
90/396 million yuan, accounting for 7.73%/16.13% of inventory respectively. In addition, the company's accounts receivable as of 24Q1 were 653 million yuan, an increase of about 176 million yuan over 477 million yuan at the end of 2023. The company has a good inventory structure and a month-on-month increase in accounts receivable, showing good future revenue momentum.
Equipment upgrades and new product launches are being carried out simultaneously. Downstream CMP has fully blossomed. In terms of equipment upgrades, the company upgraded some mainstream models according to customer needs, and achieved higher breakthroughs in WPH (number of pieces produced per hour) and process flexibility. Furthermore, the company launched the Universal H300 machine in 2023, which greatly improved the technical performance of the whole machine through innovative polishing system architecture design and optimized cleaning technology modules. The machine is expected to be mass-produced in 2024. At the same time, the company is actively developing various downstream CMP. The Universal-150Smart for third-generation semiconductor and other customers is compatible with 6-8 inch polishing of various semiconductor materials, and has been shipped in small batches.
The GP300 thinning machine was successfully expanded, and equipment such as cutting/cleaning was opened. The company developed the Versatile-GP300 all-in-one thinning and polishing machine. It stably achieved a 12-inch wafer in-chip grinding TTV <0.8 μm for front-end wafer manufacturing, and received batch orders from many leading customers in 2023. A demo order for a sealing and testing faucet has been obtained for the 12-inch wafer thinning and coating all-in-one machine for back-end packaging. In addition, the company continues to broaden boundaries in various equipment fields: 1) cutting machine: 24H1 is sent to a storage faucet manufacturer for verification; 2) cleaning machine: the first 12-inch single-chip cleaning machine HSC-F3400 was sent to major domestic silicon chip leading companies for verification; 3) Liquid supply systems: SDS/CDS liquid supply system equipment related to grinding liquid and cleaning liquid has been purchased in batches; 4) Film thickness measurement equipment: film thickness measurement equipment used in Cu, Al, W, and Co has been shipped in small batches; 5) Wafer recycling business: by the end of 2023 Production capacity up to 10 10,000 pieces/month; 6) Key consumables and maintenance: Continue to carry out diversified development and verification of key consumables such as polishing, and promote them smoothly in large customer production lines.
Investment advice
We kept the company's net profit forecast of 99/1.35 billion yuan unchanged for 2024-25, and added a net profit forecast of 1.68 billion yuan for 2026, corresponding PE of 27/20/16 times. Huahai Qingke is the leading CMP equipment leader in mainland China. Strong Hengqiang's competitive advantage continues to be highlighted. At the same time, the company is actively developing various products, including thinning machines and cleaning machines, to grasp the growth of localized and advanced packaging. Maintain the company's “buy” rating.
Risk warning
Industry sentiment fell short of expectations, R&D progress fell short of expectations, and customer development fell short of expectations.