1Q24 saw a high increase in revenue and profit. Downstream demand drove large-scale volume rich precision 2023 to achieve a full-year revenue of 2.066 billion yuan (+33.75%yoy), a net profit of 0.169 billion yuan (-31.28%yoy), and a gross profit margin of 25.20, year-on-year -7.48pcts. The main reason was that the revenue of module products increased significantly, while the machinery and equipment invested in advance had not yet reached full production. 1Q24 achieved revenue of 0.701 billion yuan (-105.47%yoy), net profit of 0.06 billion yuan (-53.42%yoy), gross margin of 25.39, month-on-month 4.07pct. Looking ahead to the 2024, we are optimistic that the demand of customers at home and abroad will pick up, and the performance of parts manufacturers will be released. With the company's new factories in Nantong, Beijing and Singapore, the market share is expected to further increase. We expect the company's 24/25/26 net profit to be 2.5/4.3/0.6 billion yuan, optimistic about the company's performance elasticity after the release of production capacity, based on the industry average (37.6 times PE in 2025) to give a certain premium, to give the company 25 years 50.3 times PE, to maintain the purchase, the target price of 102.1 yuan.

2023 review: module revenue has increased significantly. changes in product structure and equipment investment have affected profits. in 2023, the company's process parts revenue was 0.457 billion yuan, accounting for 22.41, up 11.95 from the same period of last year and gross profit margin was 30.20. Revenue from structural parts was 0.491 billion yuan, accounting for 24.10, down 1.75 from the same period of last year and gross profit margin was 27.74. Revenue from module products was 0.925 billion yuan, accounting for 45.39, year-on-year growth of 126.13 percent, gross margin of 19.6 percent, gas pipeline revenue of 0.165 billion billion yuan, accounting for 8.11 percent, down 22.00 percent year-on-year, gross margin of 29.88 percent. In 2023, the company's gross margin was 25.20, year-on-year -7.48pcts, mainly due to the increase in the proportion of low-module products and the company's investment in machinery and equipment has not yet fully reached production. In 2023, R & D investment reached 0.206 billion billion yuan, up 69.08 percent year-on-year. The company has successfully developed AlO and YO nano-film processes for ALD and CVD machines, and the hardware gas cabinet automation production line has been successfully developed and put into use.

24 outlook: continue to benefit from the acceleration of the localization process, gradually repair profitability Fuchuang Precision 1Q24 to achieve revenue of 0.701 billion yuan (-105.47%yoy), home-to-home net profit of 0.06 billion yuan (-53.42%yoy), gross margin of 25.39 percent, month-on-month plus 4.07pct. Looking ahead to 2024 1)SEMI expects semiconductor manufacturing equipment to resume growth in 2024, with sales expected to reach US $124 billion in 2025. With the company's Singapore factories put into production one after another, the company's overseas customers' income is expected to pick up. 2) We expect China's local wafer manufacturers' capital expenditure to maintain high intensity and the domestic substitution process to accelerate in 24 years, with strong revenue growth for local equipment manufacturers, driving the release of domestic component manufacturers' performance, with the company's new factories in Nantong and Beijing put into operation, the market share is expected to further increase. According to the 2024 equity incentive plan, the target value of non-return net profit for 2024-2025 is 4.00/0.55 billion yuan.

valuation: maintain the "buy" rating and adjust the target price to 102.1 yuan. considering the pressure on gross profit margin and the increase in equity incentive costs, we revised the company's net profit forecast for 2024/25 years to 2.5/0.42 billion yuan (previous value: 3.4/0.51 billion yuan). we are optimistic about the company's performance flexibility after the release of production capacity and give a certain premium based on the industry average (37.6 times PE in 2025), give the company 25 years 50.3 times PE, maintain the buy, adjust the target price to 102.1 yuan (previous value: 113.36 yuan).

risk warning: the global semiconductor downward cycle, semiconductor equipment demand is less than expected, industry competition intensified.