Key points of investment

Due to the panel cycle, performance is under pressure in the short term

In 2023, the company achieved revenue of 2,429 billion yuan, a year-on-year decrease of 11.03%; realized net profit of 150 million yuan to mother, a year-on-year decrease of 44.79%. The 24Q1 company achieved revenue of 418 million yuan, a year-on-year decrease of 30.50%; realized net profit to mother of -16 million yuan, which changed from profit to loss over the previous year. Affected by downstream display panel cycle factors, the company's testing business achieved revenue of 1.75 billion yuan in 23 years (accounting for about 72% of revenue), a year-on-year decrease of 19.42%, causing short-term pressure on 23-year results.

Continue to increase investment in R&D and optimize product portfolio to drive gross margin growth

The gross margin situation shows that in '23, the gross margin for the sector was 49.72%, up 4.26pct; the gross margin for the semiconductor sector was 52.83%, up 1.69pct year on year; and the gross margin for the new energy sector was 35.55%, up 4.18pct year on year.

In terms of R&D investment, the company invested 660 million yuan in R&D in 23, an increase of 11.92% over the same period last year, showing that R&D investment in the testing field was 30 billion yuan, down 5.34% from the previous year; R&D investment in semiconductor testing was 270 million yuan, an increase of 27.06% over the previous year; and R&D investment in the field of new energy was 90 million yuan, an increase of 51.92% over the previous year.

Benefiting from product portfolio optimization, the company's profitability continues to increase. At the same time, the company continues to increase investment in R&D, and its core competitiveness is expected to be further strengthened.

There are sufficient orders in hand, and the semiconductor measurement equipment business has accelerated. As of the disclosure date of the 23 annual report, the company's on-hand orders totaled about 3,536 billion yuan, which showed that the business had on-hand orders of about 1,248 billion yuan, the semiconductor business had on-hand orders of about 1,602 billion yuan, and the new energy business had about 686 million yuan. The company's three major businesses have sufficient orders in hand, and the fields of semiconductors and new energy sources have become an important support for the company's business performance. Meanwhile, in '23, the company's semiconductor business achieved revenue of 395 million yuan, an increase of 116.02% over the previous year.

With the continuous breakthroughs in subsequent products and the smooth expansion of customers, the company's semiconductor business is expected to continue to accelerate development.

Profit forecasting and valuation

Affected by the panel cycle, the company's FY23 and 24Q1 results are under pressure in the short term, but considering the expected recovery in the consumer electronics market in '24, the rapid development of the company's semiconductor business, and the company's sufficient on-hand orders, we expect the company's revenue for 2024-2026 to be $2,96, 3.72, and 4.68 billion yuan, respectively, with year-on-year growth rates of 21.8%, 25.8%, and 25.8% respectively; The corresponding PE was 64, 44, and 32 times, respectively, maintaining a “buy” rating.

Risk warning

Semiconductor equipment expansion falls short of expectations, industry competition intensifies, etc.