Description of the event
In 2023, the company achieved revenue of 2,508 billion yuan, +52% year-on-year, and achieved net profit of 724 million yuan, or +44% year-on-year. Achieved deduction of non-net profit of 608 million yuan, +60.05% year-on-year. Among them, 23Q4 revenue was +29.5% YoY, net profit to mother +0.7% YoY, and after deducting non-net profit +31% YoY. The 24Q1 company achieved revenue of 680 million yuan, +10.4% year on year, realized net profit of 202 million yuan, +4.3% year on year, and realized deducted non-net profit of 170 million yuan, +2.8% year on year.
Incident comments
Net revenue and profit continued to grow, and profitability remained high. Under pressure from the industry sentiment in the first three quarters of 2023, the company continued to strengthen its competitiveness in the CMP equipment market and further increased its market share. Revenue and net profit in 2023 achieved high growth, while net profit continued to grow in 2024Q1. At the same time, the company's profitability remained high, with 2024Q1 gross margin reaching 47.92% and net margin reaching 29.72%.
The company has plenty of orders in hand, which is expected to support future performance growth. As of 2023Q4, the company's inventory was 2,415 billion yuan, and the 2024Q1 inventory continued to rise, and the inventory level at the end of 2024Q1 reached a record high; the contract debt amount at the end of 2023Q4 was 1,328 billion yuan, up 1,273 billion yuan from Q3, and the 2024Q1 contract debt remained high at 1,226 billion yuan. The company has plenty of orders in hand, which is expected to support continued growth in future performance.
Investing heavily in R&D, CMP continues to launch new models. In 2023, the company's R&D personnel increased by nearly 150 compared to the previous year, an increase of about 50% over the previous year, and the proportion of R&D personnel increased from 29% to 36%. Of these, 2 doctorates were added in the second half of the year, and 59 master's degrees were added. The R&D expenses of 2023Q4 and 2024Q1 companies were 0.9 million yuan and 77 million yuan respectively, and the R&D expenses rate remained above 11%. With strong R&D support, the company continues to launch new CMP models. The Universal H300 is expected to be mass-produced in 24 years. This product is aimed at customers in the fields of integrated circuits, advanced packaging, and large silicon wafers. The Universal 150 Smart for third-generation semiconductors has been shipped in small quantities. The new model is being actively developed and is expected to be sent to customers for verification in 2024.
The product matrix continues to improve. 1) Thinning equipment: Versatile-GP300 has obtained batch orders from leading companies in various fields, and multiple mass-production machines have been sent to customers; the 12-inch wafer thinning and coating all-in-one machine for the back-end packaging field has obtained a demo order for an integrated circuit packaging test leader. At the same time, based on customer needs, dry-finish packaging thinners will be further developed and are expected to be sent to customers for verification in the first half of 2024. 2) Cutting equipment: It was sent to a leading storage manufacturer for verification in the first half of 2024. 3) Cleaning equipment: The first 12-inch single-chip terminal cleaning machine was sent to a leading domestic silicon wafer company for verification. 4) Liquid supply system: Complete the development of a new CDS product to achieve smaller size and better performance. 5) Film thickness measuring equipment: Metal film thickness measuring equipment is used for metal materials such as Cu, Al, W, Co, etc., and has been sent to many customers for verification to achieve small-batch shipment, and some machines have passed inspection. 6) Wafer recycling business: 12-inch wafers can be recycled up to 100,000 wafers/month, at a flat rate of 23H1.
7) Key consumables and maintenance services: Further improve the performance of 12/8/6 inch CMP multi-zone polishing heads, and continue to carry out diversified development and verification of key consumables such as polishing heads.
In the medium term, major manufacturers expanded production and maintained full orders, and advanced packaging matured to expand the broad market. It is expected to achieve net profit of 10.2, 13.2, and 1.7 billion yuan to mother in 2024-2026, corresponding to 25, 20, and 15 times PE, maintaining a “buy” rating.
Risk warning
1. The risk that the increase in the localization rate falls short of expectations;
2. The risk of relative concentration of customers.