Incidents:
The company released the 2024 quarterly report and the 2023 annual report. In 2024, we achieved revenue of 177 million yuan, an increase of 30.1% year on year, net profit of 41 million yuan, an increase of 44.56% year on year; net profit after deducting non-return to mother was 37 million yuan, an increase of 59.16% year on year. In 2023, we achieved revenue of 672 million yuan, an increase of 5.06% year on year; net profit to mother was 149 million yuan, up 24.23% year on year; net profit after deducting non-return to mother was 124 million yuan, up 23.23% year on year.
Earnings increased significantly in the first quarter, and profitability continued to improve:
The company's profit margin continued to rise, with a gross profit margin of 35.58% in the first quarter, up 2.63 pcts year on year and 0.48 pcts month on month. 23 The gross margin for the whole year increased quarterly, to 32.95%/34.54%/34.81%/35.10%, respectively. Mainly due to the gradual construction and commissioning of fund-raising projects, the company's production capacity level and product structure were further optimized. At the same time, costs continued to fall on the cost side. The sales expense ratio, management expense ratio, and financial expense ratio all declined in the first quarter. In '23, financial expenses decreased by 56.91% year on year, and sales expenses decreased by 11.42% year on year. R&D investment increased. In the first quarter, R&D expenses increased by 34.45% year on year, R&D expenses rate 6.02%, up 0.19 pct year on year, and 0.78 pct month on month.
The semiconductor mask version process has been upgraded, and domestic alternatives have been actively laid out:
According to data from the China Commercial Industry Research Institute, the global semiconductor mask market has a compound annual growth rate of 4.9% in 2018-2022. The company's current customers include many mainstream domestic manufacturers such as SMIC Integrated Circuit (Ningbo) Co., Ltd., Tongfu Microelectronics, Jingfang Technology, and Huatian Technology. According to the company's annual report, the company's semiconductor field has achieved mass production of semiconductor mask plates with 180nm process nodes and above, and has accumulated key core technologies for semiconductor mask plate manufacturing with 150nm process nodes and below. During the reporting period, the company indirectly invested 160 million yuan in the semiconductor mask production line project of Jiangsu Luxin Semiconductor Technology Co., Ltd.'s 130nm-28nm process node through the industrial fund Luwei Shengde. The total investment of the project is estimated at RMB 2 billion. At the same time, it actively lays out the autonomy of the upstream supply chain, and subscribed for 7.0422.54 million shares of Hunan Puzhao Information Materials Co., Ltd. for 10 million yuan during the reporting period. We believe that there is an urgent need for localization of semiconductor mask versions. With technological breakthroughs and mask process node upgrades, the company has broad room for growth.
Demand for flat panel display mask versions is refined, and downstream large-size OLED production capacity is actively being built:
As consumer requirements for display products gradually increase, mobile terminals such as mobile phones and tablets are developing towards higher pixel density, more saturated color, higher refresh rates, and lower power consumption. Higher technical requirements are placed on the lithography resolution, minimum hole size, CD uniformity, engraving accuracy, and defect size of the flat panel display mask version. LCD mask products are stable at large sizes. Due to the G8.6 generation OLED production line planning and construction of downstream panel manufacturers such as Samsung, BOE, and LG, demand for mask size is gradually increasing. The company's flat panel display products include traditional TFT LCD mask versions, as well as high-end flat panel display mask versions such as LTPS LCD, AMOLED, and mini/micro-LED. The G2.5-G11 product line covers all generations. Long-term customers include well-known panel companies such as BOE, TCL Huaxing, Tianma Microelectronics, and Xinli.
Investment advice:
We expect the company's revenue from 2024 to 2026 to be 897 million yuan, 1,184 million yuan, and 1,492 million yuan, respectively, and net profit to mother of 200 million yuan, 281 million yuan, and 361 million yuan. The company's business continues to expand. With the construction of new product production capacity, the penetration rate of the domestic mask version is expected to increase. 35XPE will be given in 2024, with a target price of 36.05 yuan for six months, maintaining a buy-A investment rating.
Risk warning: risk of production expansion falling short of expectations, risk of industry sentiment falling short of expectations, risk of falling short of expectations in developing new product technology, risk of restrictions on imported materials and equipment from overseas, increased risk of market competition