Incident: The company released the 2023 annual report and the 2024 first quarter report. The company's revenue for the full year of 2023 was 891 million yuan, +74.95% year over year; net profit to mother was 140 million yuan, +1072.38% year over year; after deducting non-net profit of 32 million yuan, reversing the year-on-year loss. The company's Q1 revenue in 2024 was 236 million yuan, +45.60% YoY, -22.29%; net profit to mother was 0.34 billion yuan, +9.16% YoY, -44.07% month-on-month; after deducting non-net profit of 08 billion yuan, reversing losses YoY -9.90%.

The overall performance was outstanding, with abundant 24Q1 orders: In 2023, the company's product range was becoming richer, market competitiveness continued to increase, and customer order volume continued to grow. This led to a rapid increase in the company's revenue and a net profit increase of more than 10 times. In 2023, the company's gross margin was 52.62%, +3.95pcts; the net margin was 15.75%, +13.44pcts year on year. The main reason for the increase in gross margin was the change in the company's product structure, the promotion of high-margin products was smooth, and the scale effect was evident. In terms of expenses, the company's sales/management/R&D/finance expenses rates in 2023 were 11.38%/9.94%/25.62%/-0.91%, respectively. The year-on-year changes were +0.82/-1.85/-14.78/-0.82pcts, respectively. The main reason for the decline in R&D expenses was that the revenue growth rate was far greater than the growth rate of R&D expenses. The company's performance in Q1 increased year on year in 2014. The main reason for the increase in profitability was that the company's product types were becoming richer, market recognition continued to increase, and the company's product sales volume increased sharply year over year. In Q1 '24, the company had plenty of orders, which laid the foundation for continued growth in performance. The company's performance is expected to maintain steady growth throughout 2024.

The combination of software and hardware provides solutions, and the advantages of customer resources are highlighted: the company's nine series of equipment and three series of software product portfolios provide customers with a full range of yield management solutions. Nine series of equipment are aimed at the needs of all types of integrated circuit customers. Among them, six series of equipment have been mass-produced and applied in batches to leading domestic customers. The technical indicators fully meet the process needs of mainstream domestic customers, and the market share of the company's products has been growing steadily and rapidly; in addition, three series of equipment have completed prototype development. Among them, bright field equipment and OCD equipment have been shipped to customers to carry out production line process verification and application development, and dark field equipment is undergoing process verification and application development for customer samples, and on-site evaluation intentions have been reached with many leading domestic customers. All three series of intelligent software have been applied to leading domestic customers, and the coverage of application fields has been continuously improved.

Software products are combined with quality control equipment to provide solutions, which can effectively improve the yield and performance of customer products.

Benefiting from the company's strategic layout in terms of equipment and software product portfolio, the company's customer base has covered a wide range of advanced process companies such as logic, storage, power semiconductors, and MEMS; semiconductor companies with compounds such as silicon carbide, gallium nitride, and gallium arsenide; advanced packaging companies such as wafer-level packaging and 2.5D/3D packaging; semiconductor material companies such as large silicon wafers; and various process equipment companies such as etching equipment, thin film deposition equipment, and CMP equipment.

Deepen the forward-looking layout of technology and seize opportunities in the HBM inspection/measurement market: applications such as AI and computing power chips have brought many process innovations to integrated circuit manufacturing, including 2.5D and 3D packaging for HBM. These process innovations also place higher demands on inspection and measurement equipment. The company's product range layout in this area is already very comprehensive and in-depth. In 2.5D and 3D packaging applications, the company's graphic wafer defect inspection equipment can effectively solve the problems of significantly increased inspection difficulty due to improvements in packaging technology, such as continuous narrowing of the RDL line width, increasing surface roughness interference, etc., and the high inspection requirements of micro bumps brought about by 3D packaging; 3D morphology measurement equipment can effectively solve the full range of quality control requirements such as gluing, lithography, film, electroplating, and etching of small RDL line widths and TSV processes; the laser engraving accuracy measurement equipment has also developed targeted infrared The lighting solution can effectively control the bonding and alignment process in the package. In addition, the company always maintains technical interface with customers to ensure that the company's testing and measurement equipment can support the customer's new manufacturing process and improve the overall product yield during the mass production phase of the customer's new product. The company's R&D team always adheres to the forward-looking layout of technology, which will support customers in developing and mass-producing new manufacturing processes, and enable the company to better seize future market opportunities.

Raise profit forecasts and maintain the “gain” rating: We are optimistic that the semiconductor inspection and measurement equipment market in China is broad. Combined AI will drive an increase in demand for HBM chips, which in turn will drive an increase in demand for HBM chip 2.5D/3D package inspection and measurement. The company's inspection/measurement equipment layout in this area is quite advanced, and it is expected to seize future market opportunities. Considering that the company has plenty of orders in hand and there is plenty of room for growth in the company's performance, the profit forecast was raised. In 2024-2026, the company's net profit to mother was 210 million yuan, 310 million yuan, and 430 million yuan respectively. EPS was 0.66 yuan, 0.97 yuan, and 1.34 yuan respectively, and the corresponding PE was 76X, 52X, and 37X respectively.

Risk warning: risk of falling inventory prices, macro-environmental risk, risk of fluctuations in industry sentiment, risk of customer demand falling short of expectations