Revenue is growing rapidly, and a high percentage of mid-term dividends give back to investors
24H1 achieved revenue of 2.5 billion yuan, +73.69% YoY, 0.1 and 0.096 billion, +7.21% and +4.05% YoY; Q2 achieved revenue of 1.358 billion in a single quarter, +51.1% YoY, net profit to mother and 0.043 billion, or -16.35% and -18.3% YoY. Profit growth was significantly slower than revenue growth, mainly due to a 3.85 pct drop in gross margin and an increase in asset impairment losses in the first half of the year. The company won the bid for BOE's 8.6th generation AMOLED production line project, and the display panel industry is booming. The cash dividend for the first half of '24 was 0.032 billion (tax included), and the dividend ratio was 31.79%.
Considering the good foundation of cooperation between the company and BOE, we expect the continuation of the company's orders. We expect the company's net profit to be 0.27/0.34/0.41 billion yuan in 24-26, with 25 times PE over 24 years, and a target price of 12.82 yuan, maintaining a “buy” rating.
The semiconductor and new display panel industries are booming, and the proportion of display panel orders is rising.
Looking at the downstream sector, semiconductors, pan-semiconductors, new displays, life sciences, and pharmaceuticals achieved revenue of 19.41, 0.286, 0.188, and 0.043 billion, respectively, +98.44%, +218.31%, +38.42%, and -73.29%, with gross margins of 9.82%, 8.01%, 7.58%, and 12.18%, respectively. The semiconductor and new display panel industries have maintained a high level of prosperity. In terms of in-hand orders, as of 24H1, the company's on-hand orders were 2.251 billion, down 22% from the previous year. Among them, orders for semiconductors, pan-semiconductors, new displays, and biomedicine were 1.873, 0.186, and 0.127 billion. In the past two months, the company added 1.133 billion in new display orders, 0.751 billion in semiconductor and pan-semiconductor orders, 0.197 billion in semiconductor and pan-semiconductor orders, and 0.183 billion in biomedical orders. The share of display panel orders increased.
Secondary allocation revenue has increased significantly, and gross margin is expected to improve
By business, 24H1 cleanroom system integration, mechatronic process systems, and secondary distribution achieved revenue of 1.134, 0.829, and 0.536 billion, respectively, compared with +18.61%, +140.46%, and +297.74%, with gross margins of 8.27%, 10.16%, and 11.11%, respectively. In terms of manual orders, as of 24H1 cleanroom system integration and mechatronic process system, new orders were 1.421 billion yuan, down 31.22% year on year, and new secondary distribution orders were 0.824 billion, +3.39% year over year. The share of secondary distribution orders increased 8.81 pcts year over year to 36.60%. We believe that the company's gross margin is expected to improve as secondary distribution orders are converted.
Gross margin was under pressure for a short time, and the cost ratio declined
Due to strong market competition pressure, 24H1's gross margin fell 3.85 pct year on year to 9.5%, and Q2's gross margin in a single quarter was 9.39%, -2.98 pct year on year. The comprehensive cost ratio was 2.87%, -0.93pct year over year, with sales, management, R&D, and finance expenses ratios -0.16pct, -0.72pct, -0.19pct, and +0.14pct, respectively. Asset and credit impairment losses were 0.029 billion, an increase of 0.017 billion over the previous year, mainly due to the increase in contract assets of 0.475 billion over the end of the previous year, resulting in more asset impairment. Under the combined influence, the company's net interest rate was 3.98%, -2.47pct year on year, and 3.23% for the Q2 single quarter, and -2.61 pct year on year. The net CFO of 24H1 was -0.353 billion, with a year-on-year increase of 0.183 billion dollars. The current payout ratios were 78.3% and 91.7%, respectively, -18 pct and -16 pct.
Risk warning: downstream demand falls short of expectations; industry competition intensifies; project implementation & repayment fall short of expectations.