The company released its 2024 semi-annual report. In the first half of 2024, the company achieved operating income of 0.45 billion yuan, +41% YoY; net profit to mother 0.1 billion yuan, +39% YoY; net profit after deducting non-attributable net profit of 0.099 billion yuan, +46% YoY. In 2024Q2, the company achieved operating income of 0.25 billion yuan, +55% year over year; net profit to mother 0.06 billion yuan, +56% year over year; net profit after deducting non-return to mother 0.06 billion yuan, +59% year over year.
The company's performance is in line with our expectations. Against the backdrop of overall pressure on the industry, the company bucked the trend, demonstrating the company's strong alpha attributes in the field of direct writing lithography.
The company's profitability remains excellent. Because the Ministry of Finance issued the “Compilation 2024 of the Guidelines for the Application of Accounting Standards for Enterprises” in March of this year, which stipulates that guarantee warranty expenses should be included in operating costs, the company's warranty expenses that were originally included in sales expenses were adjusted to be included in operating costs. As a result, the gross margin for a single Q2 quarter at the statement level was not comparable to the sales expense ratio. Therefore, we directly compared net interest rates and came to the conclusion that the company's profitability remains strong. Last year, Q2's net interest rate was the highest in four quarters, reaching 24.21%. However, the company's Q2 net interest rate this year was 24.24%, and it still achieved slight growth against the backdrop of last year's high base. We think the reason is mainly to benefit from the era of high computing power, PCB product structure upgrades, and rapid overseas growth. The proportion of high-end products has increased, the proportion of overseas orders has increased, and the company's profitability has increased.
PCBs continued to improve, and pan-semiconductors ushered in the dawn. On the one hand, the global market share of the company's PCB equipment is expected to increase further against the backdrop of high-end products and high overseas growth. The PCB industry chain moved to Southeast Asia, and the company benefited significantly, because those that can transfer the industrial chain are all large enterprises with financial strength and technical strength. Those that expand production are often advanced PCB boards, so the competitive landscape is better, and it is difficult for other domestic companies to participate, so the more technologically powerful Chipboard Micropack benefits even more. The company already sold equipment to the Japanese and Vietnamese markets in 2022, and successfully sold to regions such as Thailand, Vietnam, Japan, South Korea and Australia in 2023. The business grew rapidly, and the export order performance was good. In addition, the era of high computing power brings demand for advanced PCB boards and ABF boards, and the company's direct writing lithography equipment is more suitable for advanced PCB boards and ABF boards. On the other hand, the company has many 0-1 explosive growth points in pan-semiconductors. In terms of advanced packaging, the company lays out direct writing lithography, bonding, and alignment equipment, which is expected to build an advanced packaging platform enterprise; in terms of new displays, mini/micro-LED is driving an increase in demand for direct writing lithography equipment, and the company is expected to benefit deeply.
Investment advice: We expect the company's net profit to be 0.274, 0.375, and 0.484 billion yuan in 2024-2026, up 53.0%, 36.5%, and 29.1% year-on-year. The current stock price corresponds to the company's PE of 25, 19, and 14X. The company is a domestic direct writing lithography platform enterprise. The market share in the PCB field is expected to increase rapidly, and the pan-semiconductor sector is expected to dawn. We are optimistic about the company's growth for a long time and maintain a “buy” rating.
Risk warning: The localization of advanced packaging equipment falls short of expectations, the risk of fluctuating demand in the downstream PCB market, and overseas market expansion falls short of expectations.