Core views
The company announced the 2024 “Improving Quality, Efficiency and Reward” action plan, which includes 5 specific measures to analyze various aspects such as business development, internal governance, shareholder returns, and information disclosure to comprehensively promote the company's high-quality development. In terms of business operations, as a leading domestic direct writing lithography equipment company, the company will continue to focus on the main circuit and explore new fields. The PCB field relies on product upgrades and rapid export growth with two-wheel drive, and the pan-semiconductor sector relies on R&D to further expand the application market. In terms of shareholder returns, the company will continue to implement cash dividends, actively implement share repurchases, and firmly implement shareholder return plans.
occurrences
On June 27, 2024, the company issued the 2024 “Improving Quality, Efficiency and Reward” action plan, proposing five specific measures.
Brief review
The action plan really focuses on high-quality business development+corporate governance+shareholder returns, and takes more measures to help the company develop with high quality
Chipboard's 2024 “Improve Quality, Efficiency, and Value Return” action plan includes 5 specific measures: ① focus on strengthening the main business, improve business quality and efficiency, and return investors with good performance growth; ② continue to improve corporate governance, prevent risks and improve the standard level of operation; ③ firmly implement shareholder return plans; ④ disclose high-quality information to actively convey the company's investment value; ⑤ continuously evaluate and improve action plans to maintain the company's market image.
Business management: Focus on the main circuit to develop new fields and promote the deepening application of direct writing lithography technology. The company is a leading domestic direct writing lithography equipment company. It has fully covered all segments of the PCB product market. At the same time, it has continuously launched pan-semiconductor direct writing lithography equipment for IC mask plate making, IC carrier boards, advanced packaging, new energy photovoltaics, and new displays, and the growth space continues to expand.
In the PCB field, the company is expected to grow beyond the industry by benefiting from product upgrades & export two-wheel drives in the era of high computing power. In 2024, the company will strengthen the product upgrade of PCB equipment in the two dimensions of R&D and production expansion, promote a continuous increase in the market share of high-end PCB products such as multilayer boards, HDI boards, flexible boards, and IC carrier boards, and simultaneously increase production expansion of NEX series direct writing lithography equipment in the high-end solder mask market; at the same time, increase the company's market layout in Southeast Asia, actively build overseas sales and operation and maintenance teams to enhance the service capabilities of overseas customers.
In the field of pan-semiconductors, in 2024, the company will continue to expand multiple tracks, enrich its product matrix, and promote the continuous deepening application of direct writing lithography technology. In terms of IC carrier boards, MAS4, a carrier board device with a resolution of 4 μm has now been sent to the client for verification. In 2024, the company will continue to increase research and development of new products to accelerate production capacity expansion and performance improvement; in terms of advanced packaging, the WLP2000 performance indicators of the wafer-level packaging equipment independently developed by the company have reached the international advanced level, and the company will accelerate the improvement of the production capacity efficiency of packaging equipment to meet the exposure process on large-area chips with higher computing power; in terms of mask plate making, the company is the first to meet 90nm node plate production The required mask plate making equipment has been verified on the client side, and the research process of 90nm-65nm plate making and lithography equipment will be promoted this year; in terms of new displays, the company's equipment has good advantages in solving mini/micro-LED chip and substrate manufacturing and using RDL rewiring technology to solve massive transfer problems; in terms of new energy photovoltaics, the company will actively promote product development and industrialization verification of direct writing lithography equipment in the photovoltaic field. In 2024, the company will continue to promote cutting-edge technology research and development, accelerate the development of new products, and seize multiple industry opportunities; for example, the company introduced bonding process solutions at the SEMICON CHINA 2024 exhibition and exhibited the new WA 8 wafer alignment machine and WB 8 wafer bonding machine; at the same time, the company will also promote the technical roadmap for measurement, exposure, and inspection required for advanced packaging.
Shareholder return: Continue to implement dividends+share repurchases, and firmly implement shareholder return plans. The company attaches importance to reasonable return on investment for investors. In 2023, the company distributed a total cash dividend of 105 million yuan (tax included), accounting for 58.42% of the company's net profit due to mother in 2023, and shared the company's development dividends with all shareholders. In 2024, the company will continue to meet capital expenses and operating capital requirements under the premise of ensuring the long-term development of the company in accordance with laws and regulations and the “Articles of Association” on cash dividends, provide investors with continuous and stable cash dividends based on the company's undistributed profits and capital situation, and implement a “long-term, stable and sustainable” shareholder value return mechanism. In addition, the company announced a share repurchase plan in February 2024. It plans to repurchase the company's shares with a total capital of RMB 30 million to RMB 60 million (inclusive). As of May 31, 2024, 477,322 shares of the company have been repurchased, and the total amount of capital paid is about RMB 3.02 million (excluding transaction fees such as stamp duty and transaction commissions).
Key assumption of profit forecasting: The company's main revenue comes from equipment sales, mainly including the PCB series and the pan-semiconductor series. In addition, leasing and other businesses contribute a small portion of the revenue.
① PCB series: The company is a leading domestic direct writing lithography equipment company. In recent years, the company has continuously improved the performance of PCB exposure equipment. The equipment functions have expanded from line layer exposure to solder mask layer exposure, covering all segments of the PCB product market. In 2024, as the downstream PCB boom recovers, the industry's demand to expand production is expected to be released quickly. At the same time, the company has achieved two-wheel drive through product upgrades and exports, and the business is expected to achieve rapid growth, and the overall profit level is expected to remain relatively stable as the company continues to upgrade its product structure. We expect revenue growth rates of 30.0%, 23.5%, and 18.0% respectively in 2024-2026, with gross margins of 35.2%, 35.0%, and 35.0% respectively.
② Pan-semiconductor series: In recent years, the company has continued to launch pan-semiconductor direct-writing lithography equipment for IC mask plate making, IC carrier boards, advanced packaging, new energy photovoltaics, and new displays. The product matrix continues to be rich and the application fields continue to expand. It is expected that this series of products will maintain a higher revenue growth rate than PCBs. We expect revenue growth rates of 80%, 60%, and 40% respectively in 2024-2026; due to the continuous launch of new products and market recognition, the product profit level may increase steadily. The estimated gross margin is 58.5% and 58.8, respectively %, 59.0%
③ Leasing and others: The company sells equipment while also providing customers with corresponding periodic equipment maintenance services to obtain part of the revenue; in addition, the company provides a small amount of equipment leases according to customer needs and charges rental fees during the rental period. Due to the gradual expansion of the overall shipping scale, the corresponding demand for maintenance services and the like will also grow rapidly, so we expect that the scale of this business may increase rapidly. Revenue growth is expected to be 60%, 40%, and 28% in 2024-2026, and the gross margin will remain at 70%.
④ Other businesses: The revenue volume of other businesses is small and is expected to maintain relatively steady growth. Revenue growth in 2024-2026 is expected to be 10%, 10%, and 10%, and gross margin remains at 78%.
Investment advice: We expect the company to achieve revenue of 11.84, 15.98, and 2,014 billion yuan in 2024 to 2026, with year-on-year increases of 42.88%, 3 4.89%, and 26.07%; net profit to mother will be 2.62, 3.65, and 473 million yuan, respectively, with year-on-year increases of 45.97%, 39.64%, and 29.44%, respectively. The PE corresponding to the current market value is 31.42, 22.50, and 17.38 times, respectively, giving a “buy” rating.
Risk analysis
① Market competition has intensified risks: In recent years, the technical level of China's PCB and pan-semiconductor equipment industry has continued to improve, and the advantages of domestic equipment in terms of product cost performance and after-sales service have gradually become apparent. The gradual rise of China's PCB and pan-semiconductor equipment manufacturers will attract the attention of international competitors, thereby increasing market competition. Furthermore, the rapid growth in demand in the PCB and pan-semiconductor equipment market and the huge domestic import substitution market space will also attract more potential entrants. As a result, the company faces the risk of increased competition in the market.
② Risk of downstream market development falling short of expectations: The company's industry is affected by fluctuations in demand in the downstream PCB and pan-semiconductor terminal consumer markets, and its development is often cyclical. If the high-end product upgrade trend in the terminal industry slows down or the cyclical global macroeconomic environment deteriorates, it will directly affect the market demand for these terminal industry products, thereby adversely affecting the market demand for upstream PCBs and pan-semiconductor lithography equipment, and there is a certain risk of cyclical fluctuations.
③ Risk that profit forecasting assumptions are not true: The revenue growth rate is an important assumption for future profit forecasting and valuation. If affected by various factors, the company's revenue growth falls short of expectations, and there is a risk of decline in response to the company's future profit forecast and valuation model. Our estimates of the impact of changes in revenue expectations on the company's profit and valuation sensitivity are shown in the table below.
Under the current forecast scenario, we expect the company to achieve revenue of 11.84, 15.98, and 2,014 billion yuan in 2024-2026, with year-on-year increases of 42.88%, 34.89%, and 26.07%, respectively; net profit to mother will be 2.62, 3.65, and 473 million yuan respectively, up 45.97%, 39.64%, and 29.44% year-on-year respectively.
When the company's future revenue falls slightly below expectations, we assume that 2024-2026 revenue will decrease by 2%, 2%, and 2%, respectively, compared to the current scenario, and the corresponding company's net profit to mother will decrease by 1.64%, 1.72%, and 1.78% compared to the current scenario.
When the company's future revenue falls far short of expectations, we assume that 2024-2026 revenue will decrease by 4%, 4%, and 4%, respectively, compared to the current scenario, and the corresponding company's net profit to mother will decrease by 3.28%, 3.45%, and 3.56% compared to the current scenario.
Under extreme circumstances, we assume that 2024-2026 revenue is down 6%, 6%, and 6% from the current scenario, respectively, and the corresponding company's net profit to mother is 4.92%, 5.17%, and 5.34% lower than the current scenario.