Incident Overview

The company released its 2023 annual report and 2024 quarterly report.

Semiconductor measurement equipment was released rapidly, and the 23-year performance achieved rapid growth 1) Revenue side: Achieved revenue of 891 million yuan in 2023, +74.95% year over year. By product: testing equipment achieved revenue of 654 million yuan, +70.15% year over year; measurement equipment achieved revenue of 222 million yuan, +88.56% year over year. 2) Profit side: Net profit to mother in 2023 was 140 million yuan, +1072% year over year, net profit after deduction was 32 million yuan, reversing losses. In 2023, the company's net sales interest rate and net interest rate after deduction were 15.75% and 3.56%, respectively, compared with +13.44 and +20.81 pct, respectively. The profit level increased dramatically, mainly due to the decline in the expense ratio due to the scale effect. On the cost side, the cost rate for the company period in 2023 was 46.03%, -16.64pct year on year. Among them, the R&D cost ratio was -14.78pct year on year, which is a particularly significant decrease. On the gross margin side, the company's gross sales margin reached 52.62% in 2023, +3.95pct. Among them, the gross margins of testing equipment and measurement equipment were 57.17% and 38.79%, respectively, +4.54 and +2.95pct. The performance was outstanding.

2024Q1 revenue continued to grow rapidly, and contract liabilities increased month-on-month 1) Revenue side: 2024Q1 achieved revenue of 235 million yuan, +45.60% year over year, mainly due to the company's sufficient on-hand orders, and a significant year-on-year increase in sales of the company's semiconductor equipment products; 2) Profit side: 2024Q1 achieved net profit of 34 million yuan, +9.16% year-on-year, after deducting net profit of 7.78 million yuan. The actual profit level improved. 2024Q1's gross sales margin was 54.34%, -0.92pct year on year, and still performed well. The cost rate during 2024Q1 was 47.46%, -5.8pct year over year, mainly due to scale effects. As of the end of 2024Q1, the company's contract debt was 478 million yuan, an increase over the previous month. We estimate that 2024Q1 orders will continue to grow rapidly.

Leading domestic production testing equipment, fully benefiting from the wave of domestic substitution

The measurement equipment market is large, the localization rate is low, and the profit level is excellent. It is one of the most flexible segments. The company's non-graphic wafer defect inspection, graphic wafer defect detection, overlay accuracy measurement, dielectric film film thickness measurement, three-dimensional morphology measurement, and metal film thickness measurement equipment have been mass-produced and used by various domestic customers. Brightfield nanographic wafer defect detection equipment and optical key size measurement equipment have been shipped by customers to carry out production line process verification, and dark field nanographic wafer defect detection equipment is undergoing process verification and application development for customer samples. While the products continue to be rich, it is actively laying out advanced processes to fully benefit from the wave of import substitution.

Investment advice

We expect 2024-2026 revenue to be 13.41 billion yuan, 19.48, and 2,608 million yuan, respectively, +51%, +45%, and +34% year-on-year net profit for 2024-2026, 2.20, 3.29, and 467 million yuan, respectively, +57%, +50%, and +42% year-on-year, EPS of 2024-2026 is 0.69, 1.03, and 1.46 yuan, respectively, and the 2024/5/14 stock price of 50.67 yuan corresponds to 74, 49, and 35 times PE. Considering the broad market space and low localization rate of quantification/testing equipment, the company's growth flexibility is high. It covered for the first time, and was given an “increase in weight” rating.

Risk warning

The semiconductor industry is declining, and the expansion of new products falls short of expectations, etc.