Incident: The company released its 2023 annual report, achieving operating income of 2,944 million yuan, yoy +17.74%; realized net profit of 407 million yuan, yoy +36.37%; realized net profit of 386 million yuan, yoy +82.29%; of which net investment income was 225 million yuan, yoy +35.54%, mainly due to a sharp increase in the operating profit of the company's associated enterprises; gross margin was 23.68%, yoy-0.31pct, net profit margin 13.73%, yoy+ 2.5 pct The company plans to pay a cash dividend of 5.90 yuan (tax included) for every 10 shares to all shareholders, totaling 353 million yuan (tax included), accounting for 86.87% of the net profit attributable to shareholders of listed companies.
Q4 Revenue grew steadily year over year, and profits declined significantly from month to month due to the investment income of joint ventures. Looking at a single quarter, 23Q4 achieved operating income of 748 million yuan, yoy +14.5%, qoq -9.5%; realized net profit of 57 million yuan, yoy -1.92%, qoq -55.4%; realized net profit withheld from mother of 61 million yuan, yoy +196.3%, qoq -41.0%; gross margin was 22.86%, yoy-1.23pct, qoq-0.13pct, net margins of 7.69%, yoy-0.17pct, qoq-8.23pct. Net profit to mother declined significantly month-on-month, mainly due to the company's 24Q4 net investment income of RMB 122 million, or QoQ -68.2%.
The decline in procurement prices of raw materials for rubber additives led to an increase in gross margin, and the electronic materials business grew significantly. By sector, 1) special rubber additives: revenue 2.28 billion yuan, yoy +9%, average sales price down 5.63% year on year; average purchase price of phenol, the main raw material, fell 21.82%, gross profit margin 25.19%, yoy+1.33pct; 2) electronic materials: revenue 554 million yuan, yoy +44%, average price increased 0.9% year on year, gross margin was 26.32%, yoy+1.71 pct; 3) Biodegradable materials: revenue of 100 million yuan, yoy +492%, average price decreased 19% year on year Gross profit margin -29.74%, yoy-28.58pct.
Semiconductor photoresist revenue bucked the trend, and new products and new customers achieved breakthroughs. In 2023, the company continued to release new semiconductor photoresist products, achieving revenue of 200 million yuan, and bucked the trend of 14.13% in a sluggish environment in the semiconductor industry. Among them, 1) ArF photoresists: All process indicators of the first batch of products can match the products of major international photoresist manufacturers. Some materials have passed downstream customer certification in 24Q1 and are expected to start increasing in 24Q2. Currently, production capacity can also be supplied to most domestic chip manufacturers; 2) KrF photoresist: sales have grown rapidly year-on-year, and the market share continues to rise. The first supplier in the wafer factory production line; 3) i-Line photoresists: The company's I-line photoresists are close to the international advanced level, and their types cover most of the process requirements of domestic logic and memory production lines. Among them, ICA photoresists reached a year-on-year growth rate of 335%; 4) Semiconductor photoresist resins: Multiple G/I line resins are in pilot/major testing, and some KrF PHS resins have been used in the company's photoresist products, and successfully passed customer STR and MSTR, achieving a key breakthrough in KrF film-forming resins. Revenue from new semiconductor photoresist products accounted for 44.12% of total sales, up 5 percentage points from 2022; among them, the top 9 new products were 5 KrF products, 3 I-line products, and 1 ICA product; 9 products contributed 80.18% of the total sales revenue of new products. By the end of 2023, the company had 27 12-inch customers, 23 8-inch customers, and 8/12-inch customers contributed more than 50% to revenue.
The share of panel photoresists was further increased, and new customers continued to develop. In 2023, Beixu Electronics's display panel photoresist business revenue was 261 million yuan, yoy +22.8%, and sales volume was yoy +29.8%. The market share was about 3 percentage points higher than the previous year, with a share of more than 50% in BOE. With the expansion of 4 Mask products, the share is expected to increase further; high-resolution photoresists and low-temperature photoresists for AMOLED were mass-produced and sold at major domestic customers respectively. In terms of new customer development, there are 6 new mass production and sales customers in 2023: H customers, CH customers, V customers, T customers, B customers, and CTO customers. Some customers are expected to start this year.
Profit forecast: Due to the uncertainty of product introduction, we have adjusted the profit forecast. The company's net profit for 2024-2026 is estimated to be 4.85, 5.97, and 702 million yuan (previously estimated at 524 and 624 million yuan respectively for 24-25), and the corresponding PE valuation is 36.4/29.6/25.2 times, respectively, maintaining a “buy” rating.
Risk warning: Industry sentiment falls short of expectations; R&D progress falls short of expectations; customer verification falls short of expectations.