Incident Overview
The company released the 2024 mid-year report forecast.
Q2 Performance improved significantly year over year, showing an inflection point in the company's profit
2024H1 expects to achieve net profit of 45-55 million yuan, +272.09%-+354.77% year-on-year, of which Q2 achieved net profit of 60.93-70.93 million yuan, +27810% - +32391%; 2024H1 expects to achieve net profit of 7-3 million yuan, +84.50%-+106.64% year-on-year, of which Q2 achieved net profit without deduction of 16.72-26.72 million yuan The loss was drastically reversed (23Q2 loss of 45.73 million yuan), which basically met our expectations. The company's Q2 performance improved dramatically, mainly due to: (1) showing that the industry's recovery situation continued to improve, market demand gradually recovered, and OLED, etc. accelerated revenue recognition; (2) semiconductor delivery capacity continued to improve, and revenue recognition amounts increased significantly year-on-year. We judge that 2024Q2's revenue side improved significantly from month to month, and the scale effect led to a significant improvement in profit levels.
Measuring/testing equipment is the most flexible segmentation circuit. Judging from industry logic, the company's semiconductor equipment business is growing at an accelerated pace. Judging from industry logic, the semiconductor measurement equipment market is large, the localization rate is low, and the profit level is excellent. It is one of the most flexible segments. At present, the company's core products have covered 1xnm and above processes. Film thickness products, OCD equipment, and electron beam defect review equipment have received repeated orders for advanced processes. As of the disclosure date of the 2023 annual report, the company's semiconductor sector had ongoing orders of about 1.602 billion yuan, achieving rapid year-on-year growth. On July 9, 2024, it was revealed on the Jingxing public account that it plans to introduce a large number of the company's 20 EPROFILE 300FD measuring machines in the third phase of Jinghe and subsequent additional production capacity, and to cooperate in the fields of scanning electron microscopes, brightfield defect detectors, WAT testers, yield testers, etc., which sent a positive signal. The company's domestic replacement logic for measurement equipment continues to be implemented, and we are optimistic about the release of subsequent orders.
AI is driving consumer electronics into a new upward cycle, and the traditional main business is still expected to achieve steady growth in the short term. Since 2023Q4, the downstream market has picked up moderately. The company shows that related businesses in the field have begun to gradually recover and improve, new orders have grown steadily, and an inflection point has already appeared in the main business. In the medium to long term, Apple WWDC24 released Apple Intelligence, and the introduction of AI has given new application scenarios to mobile phones. We believe that it will further drive the wave of old users switching devices, and consumer electronics are expected to enter a new upward cycle and drive display-related demand. Furthermore, the panel industry is in a stage of rapid iterative development from LCD to OLED and Micro-OLED, and the company is actively developing related product technology. The company has specially set up a precision measurement subsidiary in Shenzhen to further expand AR/VR industry-related businesses in the field of new displays. We believe that the company's traditional panel business is expected to achieve steady growth.
Investment advice
We maintain the company's 2024-2026 revenue forecasts of 29.85 billion yuan, 38.30, and 4.804 billion yuan, respectively, +23%, +28%, and +25% year-on-year net profit for 2024-2026 of 2.61, 4.43, and 0.739 billion yuan, respectively, +74%, +70%, and +67% year-on-year, EPS of 0.94, 1.59 and 2.66 yuan, respectively, and stock price of 61.50 on 2024/7/12 Meta corresponds to PE of 64, 38, and 23 times, maintaining an “overweight” rating.
Risk warning
The display panel industry is declining, semiconductor business expansion falls short of expectations, etc.