Key points of investment
On June 4, 2024, the company released an investor relations activity record sheet, indicating that the 24Q2 new orders were in good condition, and that the production, delivery and inspection plans of various machines met the company's expectations.
The 2023 performance grew steadily, and the market share of Qiandao coated imaging equipment continued to increase. In 2023, the company achieved revenue of 1,717 billion yuan, an increase of 23.98%; net profit to mother was 255 million yuan, up 25.21% year on year; net profit after deducting non-return to mother was 187 million yuan, up 36.37% year on year; and gross profit margin was 42.53%, up 4.13 percentage points year on year. As of the end of 2023, the company had orders of about 2.2 billion yuan (tax included).
By product, in 2023, lithography process gluing and imaging equipment and single-chip wet processing equipment achieved revenue of 10.66 billion yuan and 600 million yuan respectively, up 40.80% and 9.09%, respectively. Gross margins were 38.84% and 46.37%, respectively, and increased 4.19 and 7.20 percentage points, respectively.
The company's new orders in 2023 were basically the same year on year, with more new orders in the second half of the year than in the first half of the year. Qiandao gluing and imaging equipment has maintained a good year-on-year growth rate, and the domestic market share has further increased; among them, physical cleaning machines maintain a leading position in the industry, and new chemical cleaning machine products have achieved orderly breakthroughs in key customers; later advanced packaging and small-size signings are under phased pressure due to downstream market sentiment.
24Q1 Qiandao Track's revenue increased year over year. 24Q2 New Order Good 24Q1 Company achieved revenue of 244 million yuan, a year-on-year decrease of 15.27%, a decrease of 52.16%; net profit to mother of 0.16 million yuan, a year-on-year decrease of 75.73%, a decrease of 47.33%; net profit after deducting non-return to mother was 0.09 million yuan, a year-on-year decrease of 84.90%, an increase of 59.42%; and gross profit margin of 40.30%. The pressure on performance was mainly due to factors such as 1) stock order structure, production delivery and acceptance cycle; 2) share payment expenses increased 266% year over year; 3) employee remuneration expenses increased 35% year over year; 4) software VAT rebates fell 43% year over year. According to the company's April 2024 investor survey records, 24Q1 Qiandao Track's revenue grew rapidly year-on-year, and front-end cleaning maintained a good growth rate. The advanced packaging and compounds sector was affected by the decline in new orders signed in 2023. There were few inspection resources, and revenue declined slightly year-on-year.
According to the investor survey minutes released by the company in June 2024, the company stated that the 24Q2 new order situation was good, and that the production, delivery and inspection plans of various aircraft were in line with the company's expectations.
Frontier equipment continues to break through, and the amount of advanced packaging equipment can be expected. The company has now formed four major business segments for small-sized equipment, such as front-end gluing and imaging equipment, front-end cleaning equipment, advanced back-end packaging equipment, and compounds.
Qiandao Glazing Equipment: As the only domestic manufacturer that can provide mass-produced front-end gluing projectors, the company has completed full coverage of 28nm and above process nodes in the Qiandao wafer processing process, and the process technology below 28nm is being verified. The company's immersion machines have received orders from 5 important domestic customers; good progress has been made in sales of new machines such as high-end NTD negative imaging and SOC coating.
Frontier cleaning equipment: High-capacity physical cleaning machines have been sent to important domestic storage customers for verification, which is expected to open up additional market space in the storage field. The strategic new Qiandao chemical cleaning machine KS-CM300/200 received verification orders from important domestic customers in 23Q4 and reached cooperation intentions with many other important domestic customers. Some customers have already entered the configuration confirmation and business process stage.
Advanced back-end packaging equipment: The company sells glue-coated imaging equipment and single-chip wet processing equipment for advanced packaging to many overseas customers. Temporary bonding machines and unbonding machines have successively received orders from many leading domestic HBM and 2.5D sealing and testing customers, and have entered the small-batch sales stage. The company's new Frame cleaning equipment in the field of 2.5D/3D advanced packaging has also entered the small-batch sales stage. We believe that the boom in the advanced packaging industry may recover in 2024, and production capacity for superimposed 2.5D advanced packaging is tight and production continues to expand, and the company's product volume can be expected.
Small-size equipment such as compounds: In March 2024, the company released the fully automatic SiC chipping all-in-one machine KS-S200-2H1L, which further enriched the company's product layout in the small-size market and successfully expanded into the field of scraping.
Investment advice: In view of the current downstream customer expansion schedule and the company's stock order structure, we adjusted our original 24/25 performance forecast. It is estimated that from 2024 to 2026, the company's revenue will be 21.63/28.77/38.56 billion yuan (the original forecast value for 24/25 was 27.26/37.40 billion yuan), with growth rates of 26.0%/33.0%/34.0%, respectively; net profit to mother of 3.29/420/561 million yuan (the original forecast value for 24/25 was 396/564 million yuan), respectively, with growth rates of 31.3%/27.5%/33.6%; PE 40.8/32.0/ 23.9. As the only manufacturer in China that can currently provide mass-produced front-end gluing projectors, front-end cleaning equipment has opened up additional market space. Later advanced packaging equipment has benefited from industry recovery and customer production expansion, and volume is imminent. Continue to recommend and maintain the “Accumulated Holds-A” rating.
Risk warning: Downstream customer production expansion falls short of expectations or risk of overcapacity; risk of failure to industrialize new technologies, new processes, and new products as scheduled; increased risk of market competition; systemic risks, etc.