Event description

According to the company's report for the third quarter of 2023, the company achieved revenue of 256 million yuan in the first three quarters, an increase of 45.16% over the same period last year, 51 million yuan in net profit, an increase of 50.63%, and 43 million yuan in non-return net profit, an increase of 68.68% over the same period last year. In the third quarter alone, the company achieved revenue of 129 million yuan, an increase of 30.39% over the same period last year, a net profit of 28 million yuan, an increase of-15.36%, and a non-return net profit of 27 million yuan, an increase of-18.35% over the same period last year.

Event comment

The R & D investment continues to grow, and the product layout continues to expand. In the first three quarters, the company invested 146 million yuan in R & D (93 million yuan in the first half and 78 million yuan in the same period last year), an increase of 86.54% over the same period last year, accounting for 57.05% of revenue. The company continues to increase R & D investment, a substantial increase in R & D personnel, and continuous optimization of product layout:

(1) in the aspect of software, we expand the DFM series EDA software and independently develop the modeling tool CMP EXPLORER for chemical mechanical polishing process. At present, the software has been tried out and imported in several domestic head wafer factories. Extend the layout of semiconductor data analysis and management system (DATAEXP series products), expand the DE-G products on the platform, and develop web products; (2) in terms of hardware, optimize and upgrade and launch the T4000 model WAT equipment (suitable for less than 8 inches and compound semiconductor production line), which can cover the testing needs of all products such as LOGIC, CIS, DRAM, SRAM, FLASH, BCD, etc. At the same time, the reliability test and analysis system (WLR) and other functions are developed on the basis of T4000, which extends the equipment from WAT testing to WLR and SPICE and other fields.

Holding Shanghai Yiruixin, the synergy effect is obvious, and the yield promotion scheme is more perfect. During the reporting period, the company realized the holding of Ericsson, controlling a total of 62% of Ericsson through direct and indirect means. Ericsson specializes in integrated circuit testability design (DFT) technical services and product development, and its solutions can complement each other with the company's yield improvement system, open up the data link, improve the company's overall yield improvement solution, and provide a more complete solution for design companies and wafer factories. On the other hand, the company can integrate DFT technology into the existing product and technology ecology, deeply link the design end with the manufacturing end, and quickly introduce DFT products into target customers with the help of Yiruixin's business platform, so as to further expand customer territory and achieve a breakthrough in breadth and depth of technical products.

Equity incentive scheme shows confidence in performance growth. The company discloses the 2023 equity incentive plan (draft), which is aimed at a total of 87 deputy general managers, middle managers and core technical backbones, and the performance appraisal year is 2023-2025. Based on 2022 revenue (356 million yuan), the income growth target for 2023-2025 is 60%, 150%, 300%, respectively, and the corresponding income is 570 million yuan / 890 million yuan / 1.424 billion yuan, respectively. On the one hand, the equity incentive scheme can boost the mood of employees, on the other hand, it also demonstrates the company's confidence in high performance growth in the future.

Investment suggestion

It is estimated that from 2023 to 2025, the operating income of the company will be 9981,528 million yuan (the original value is 6.38 Universe 10.03 million), which is 63.0% and 53.1% compared with the same period last year. The net profit returned to the home is respectively RMB 1.68, 301, 000 and 2.47 yuan respectively, an increase of 37.3%, 78.9%, and 64.3% over the same period last year, corresponding to an EPS of 0.84, 1.50 and 2.47 yuan. Based on the closing price of 87.90 yuan on October 27, 2023, the PE from 2023 to 2025 is 104.6X/58.5X/35.6X respectively. Maintain the "buy-A" rating.

Risk hint

The wafer expansion is not as expected; the new product development is not as expected; the software business progress and customer expansion are not as expected.