The company lays out semiconductor and new energy circuits based on consumer electronics equipment and epitaxial mergers and acquisitions

The company is deeply involved in consumer electronics equipment and continues to expand industries such as semiconductors and new energy vehicles through epitaxial mergers and acquisitions. The company acquired Kunshan Heisei, Ryoo Technology, and Wuxi Changding in 2018, and Japan's Optima in 2019 to achieve more growth in consumer electronics, semiconductors, and new energy sources.

Consumer electronics: Apple industry chain boom recovers, new product launches drive demand for related equipment

The company is deeply tied to the Apple industry chain, accounting for more than 50% of revenue over the years. The apple industry chain is recovering. 2023Q4 apple production increased 58.6% quarterly, ranking first, and the overall trend is improving. The Apple iPhone 15 series is equipped with a new USB-C interface and periscope camera. The Apple Vision Pro was first introduced, opening the era of spatial computing. With the introduction and release of new products, a new round of demand for consumer electronic devices can be expected.

Semiconductor equipment: The domestic market for semiconductor equipment is large and growing rapidly, and the localization rate is low

China's semiconductor equipment industry is developing rapidly. In 2023, sales in mainland China reached 36.66 billion US dollars, up 29.7% year on year, making it the world's largest semiconductor equipment market. The company entered the field of high-end semiconductor quantification/testing equipment through the acquisition of Japan's Optima, and is expected to fully benefit from the wave of domestic substitution in the field of semiconductor measurement equipment with a localization rate of less than 5%.

The wave of AI is on the rise, making a strong entry into emerging fields such as HBM

After acquiring Optima, the company efficiently completed technology integration, continued to expand the equipment product line in the field of high-end semiconductors and applications in emerging fields such as HBM, followed the AI wave, improved poor monitoring of HBM and TSV process processes, and received full recognition from customers and batch equipment orders, and the future can be expected.

New energy equipment: New energy vehicles and the photovoltaic industry continue to expand, and the company's equipment is expected to benefit

New energy vehicles continue to be released rapidly. GGII expects China's power battery shipments to reach 2,230 GWh in 2030; the PV market space is vast, and CPIA expects global/national PV installations to reach 507/260 GW in 2024. Demand for related equipment is strong, and the company is expected to fully benefit.

Investment advice and profit forecasting

We expect the company's revenue and net profit to mother in 2024-2026 to be 5.264/6.358/7.379 billion yuan and 0.811/0.972/1.166 billion yuan, respectively. The corresponding EPS is 4.05/4.85/5.82 yuan/share, and the corresponding PE valuation is 18/15/13 times, respectively, giving the company an investment rating of “increased holdings”.

Risk warning

The risk of new Apple products falling short of expectations; the risk of semiconductor equipment falling short of expectations; the risk of increased market competition; the risk of impairment of goodwill; the risk of exchange rate fluctuations; and the risk of losing technical personnel.