Incident Overview

The company released its 2024 three-quarter report.

Panel display & semiconductor equipment revenue continued to increase. The Q3 revenue side was better than market expectations 2024Q1-3, and the company achieved revenue of 1.831 billion yuan, +18.50% year over year, of which Q3 was 0.71 billion yuan, +63.35% year over year. The revenue side accelerated further, better than market expectations. By product, 1) shows: Q3 achieved revenue of 0.493 billion yuan, compared with +55.96%, with no decline in recovery; 2) semiconductors: Q3 achieved revenue of 0.18 billion yuan, +108.36% year over year, continuing the rapid growth trend, mainly due to accelerated delivery confirmation of related orders; 3) New energy: Q3 achieved revenue of 28.62 million yuan, compared with +51.86% year over year. We estimate that the pace of customer acceptance has accelerated mainly. As of the disclosure date of this report, the company has obtained a total order amount of about 3.168 billion yuan, which shows that on-hand orders in the field are about 0.831 billion yuan, in-hand orders in the semiconductor sector are about 1.69 billion yuan, and on-hand orders in the new energy sector are about 0.646 billion yuan. Sufficient orders are expected to support steady growth on the company's revenue side.

Due to the scale effect, the profit level increased. In Q3, the profit side achieved a loss in 2024Q1-3, and the company achieved net profit of 82.24 million yuan, +753% year over year; net profit after deducting non-return to mother was 0.66 million yuan, +101% year over year.

2024Q1-3's net interest rate and deducted non-net interest rate were 2.44% and 0.04%, respectively, compared with +5.84pct and +5.29pct, respectively. The profit level increased significantly. 1) Margin side: The gross sales margin of the 2024Q1-3 company was 43.43%, -1.68pct year on year, combined with changes in gross margin of each business in the interim report (showing gross margin of 44.28%/42.41%/32.23%, respectively -3.56/-6.91/+4.82pct year on year, the semiconductor business declined significantly), we speculate that mainly products with lower advanced mature processes were confirmed in the semiconductor business, which led to a decline in overall gross margin; 2) Expense side: The cost ratio during the 2024Q1-3 period was 49.05%, -5.04pct year on year, with sales/management/R&D/finance expense ratios of -1.56/-1.34/-2.38/+0.68pct year on year, mainly due to scale effects. The reduction in the cost rate during the period was the main factor in the increase in profit levels in the first three quarters; 3) 2024Q1-3 included 0.143 billion yuan in non-profit and loss, which significantly increased profit-side performance.

Among them, net profit attributable to mother was 32.41 million yuan in 2024Q3, or +231%, to reverse losses; net profit after deducting non-return to mother was 3.68 million yuan, +110% year over year; net interest rate was 0.09%, +9.66pct year on year, and Q3 profit side continued to be under pressure: 1) The gross margin of the 2024Q3 company was 43.97%, +3.21pct month-on-month. We speculate that mainly product structure improvements, and the revenue share of high-margin products increased; 2) Expense side: the cost ratio during the 2024Q3 period 46.77%, +3.4pct month-on-month, with R&D/finance +1.09/+1.25pct year on year, respectively, suppressing profit levels to a certain extent.

Advanced process bright field equipment has been delivered. Judging from industry logic, the company is leading the import substitution of quantity/testing equipment. Judging from industry logic, the semiconductor measurement equipment market is large, the localization rate is low, and the profit level is excellent, making it one of the most flexible segments. At present, the company's core products have covered 1xnm and above. Film thickness products, OCD equipment, and electron beam defect review equipment have obtained repeated orders for advanced processes. Semiconductor silicon stress measurement equipment has been verified and has obtained repeated orders from many leading domestic customers. As of the disclosure date of this report, the company's bright field defect detection equipment for advanced process nodes has been delivered, and the rest of the products with reserves such as graphic dark field defect detection equipment are currently in the development stage. On July 9, 2024, it was revealed on the Jingxing public account that it plans to introduce a large number of the company's 20 EPROFILE 300FD measuring machines in the third phase of Jinghe and subsequent additional production capacity, and further cooperate in fields such as scanning electron microscopes, brightfield defect detectors, WAT testers, and yield testers, which has sent a positive signal. The company's domestic replacement logic for measurement equipment continues to be implemented, and we are optimistic about the release of subsequent orders.

Investment advice

We maintained the company's 2024-2026 revenue forecasts at $29.85, 38.30, and $4.804 billion, respectively; adjusted net profit to mother for 2024-2026 was $2.27, 3.47, and $533 million (original values were $261, 4.48, and 743 million yuan), respectively, due to the impact of the revenue recognition rhythm, +51%, +53%, and +54% year-on-year, with corresponding adjustments for the 2024-2026 EPS of 0.83, 1.27, and 1.95 (original value was 0.96, 1.64, and 2.7 yuan), and the stock price of 62.41 yuan on 2024/10/24 corresponds to 75, 49, and 32 times PE, maintaining an “overbearing” rating.

Risk warning

The display panel industry is declining, semiconductor business expansion falls short of expectations, etc.