Guimu's net profit was 390 million yuan, an increase of 82.66% over the previous year. Dinglong Co., Ltd. is a leading platform company in China that imports alternative innovative materials that are core “stuck” in the field of key racetracks. Currently, it focuses on the field of semiconductor innovative materials (three segments: semiconductor CMP process materials, semiconductor display materials, and advanced semiconductor packaging materials). Revenue achieved in 2022 was 2,721 million yuan, an increase of 15.52% over the previous year; the net profit of the mother was 399 million yuan, an increase of 82.66% over the previous year; after deduction, the net profit of the mother was 348 million yuan, an increase of 68.47% over the previous year. The main reason for the increase in revenue was the sharp increase in sales revenue of CMP polishing pad products over the same period last year, and the beginning of sales of CMP polishing liquid, cleaning solution products, and flexible display materials YPI and PSPI products.
Revenue from CMP polishing pads is rising, and it is expected that the amount of CMP polishing liquid and cleaning solution will be gradually released. ①. CMP polishing pad revenue in 2022 was 457 million yuan, an increase of 51.32% over the previous year. The production capacity of the first and second phases of CMP polishing pad products in Wuhan is 300,000 pieces/year. The production expansion project for the new Qianjiang Phase III polishing pads and raw materials for the core jacket has been put into operation, adding 200,000 pieces/year of production capacity. Currently, the company is the only domestic supplier of CMP polishing pads that fully masters the core R&D and manufacturing technology of the entire polishing pad process in China. It has achieved a comprehensive layout of all kinds of polishing pads available on the market, and it is expected that they will be gradually released in the future. ②. In 2022, CMP polishing liquid and cleaning solution achieved sales revenue of 17.89 million yuan, and gradually continued large-scale sales to clients. The company has developed a series of nearly 40 kinds of polishing liquid products such as polysilicon process, metal copper process, metal aluminum process, and barrier layer process. Polysilicon polishing liquid products, metal gate polishing liquid products, etc. have entered the final introduction stage, and it is expected that new orders will be obtained from downstream storage and logic customers in 2023.
The semiconductor display materials business has begun to contribute revenue one after another, and new semiconductor display materials continue to be developed and verified. The company's semiconductor display materials YPI/PSPI products achieved revenue of 47.28 million yuan, an increase of 439% over the previous year, a significant increase. Among them, sales of flexible display base material YPI products have continued to grow and have become the number one supplier for some mainstream panel customers; as the only domestic supplier of PSPI products in China, the company began shipping volumes in 22Q3. In the field of new semiconductor display materials, other new products such as panel packaging material TFE INK, low temperature photoresistor material OC, high fold OC, and high fold INK are also being developed and verified according to the plan, and technical exchanges with downstream panel customers continue to be maintained.
Profit forecasts and valuation recommendations. We forecast the 2023E-2025E revenue of Dinglong Co., Ltd. to be 3.321 billion yuan, 4.130 billion yuan, 4.737 billion yuan, an increase of 22.02%, 24.36% and 14.71% over the previous year; Guimu's net profit was 521 million yuan, 723 million yuan, 903 million yuan, an increase of 33.58%, 38.82%, and 24.86% over the previous year. We used the PE valuation method, combined with the average valuation PE (2023E) value of comparable companies to be 56.64 times, giving the company PE (2023E) 50x-60x, corresponding to a reasonable market value range of 26.050 billion yuan/31,261 billion yuan, corresponding to a reasonable value range of 27.48 yuan/share - 32.98 yuan/share, maintaining a “superior market” rating.
Risk warning: The capacity utilization rate of downstream end customers continues to be low, the recovery in demand for terminal products falls short of expectations, market competition intensifies, R&D progress falls short of expectations, customer expansion falls short of expectations, etc.