2022 performance is in line with our expectations
The company announced its 2022 results, with income of 2.72 billion yuan, + 15.5% year-on-year, net profit of 390 million yuan, + 82.7% year-on-year, and corresponding earnings per share of 0.41 yuan, in line with our expectations. Of this total, 4Q22 achieved an income of 770 million yuan and a net profit of 95 million yuan.
Trend of development
CMP polishing pads continue to grow at a high speed, accelerating the layout of other CMP polishing materials. CMP polishing pad, CMP polishing liquid and cleaning fluid are the core consumables of the three CMP links, accounting for more than 85% of the total cost of CMP polishing materials. The company's CMP material business started from the CMP polishing pad, in recent years to increase the CMP polishing fluid, cleaning fluid layout, committed to provide customers with a complete set of one-stop CMP materials and services. In 2022, the company's sales revenue of polishing mats reached 457 million yuan, an increase of 51.3% over the same period last year. In addition, the expansion project of Qianjiang Phase III polishing pad new products and its core raw materials has been put into production in 3Q22 to further improve the CMP polishing pad product series. In terms of polishing fluid business, the company achieved sales of 17.89 million yuan in 2022. In the future, with the release of more products, we think the company is expected to get more orders from customers of storage and logic chips.
Display materials to achieve large-scale income. In the semiconductor display materials section, the company focuses on the layout of YPI, PSPI, INK and other upstream core materials used in flexible OLED display screen manufacturing. In 2022, the company's semiconductor display materials YPI, PSPI products achieved sales revenue of 47.28 million yuan, an increase of 439% over the same period last year, and a significant quarter-on-quarter increase. Among them, flexible display substrate YPI has become the first supplier for some mainstream panel customers; PSPI, as the only domestic supplier, began to ship in the third quarter of 2022.
Advanced packaging materials are worth looking forward to. In the semiconductor advanced packaging materials section, the company looks forward to the layout of temporary bonding adhesive, packaging photoresist (PSPI), bottom filling glue and other advanced packaging upstream material products. In terms of product development and verification, the pilot-scale process route of temporary bonding adhesive and packaging photoresist (PSPI) has been opened, in which temporary bonding adhesive products have completed sample delivery from a domestic mainstream wafer factory, client-side verification is nearing completion, and mass production product import work is under way; packaging photoresist (PSPI) has now completed the client-side sample delivery of a large packaging factory, and the verification work is progressing steadily. In addition, the bottom filling glue has completed the small-scale formula development, and the application evaluation is under way, and the company expects to achieve client-side sample delivery in the second half of 2023.
Profit forecast and valuation
We basically maintained the profit forecast of 672 million yuan in 2023 and introduced the profit forecast of 757 million yuan in 2024 for the first time. The current share price corresponds to a price-to-earnings ratio of 37x / 33x in 2024. Maintain the outperform industry rating, taking into account the upward move of the valuation center of the industry, raise the target price by 9% to 30.0 yuan, corresponding to 42 times the price-to-earnings ratio of 2023 Compact 2024, which has 14% upside compared to the current stock price.
Risk
Goodwill impairment risk, polishing pad, polishing fluid sales are not as expected.