Tianshui Huatian Technology (002185) 华龙证券·2024-11-01 13:52Investment Rating - The report maintains a "Buy" rating for Huatian Technology (002185 SZ) [1] Core Views - Huatian Technology achieved significant profit growth in Q3 2024, with total revenue reaching 10 531 billion yuan, a year-on-year increase of 30 52% [1] - The company's profit attributable to parent company shareholders surged by 330 83% year-on-year to 357 million yuan, driven by increased investment income and industry recovery [1] - Advanced packaging capacity is steadily improving, with fixed asset expenditure exceeding 2 billion yuan in the first half of the year, primarily for advanced packaging capacity construction [1] - The semiconductor industry's recovery is strong, with increased demand from upstream industries driving higher product sales and orders [1] Financial Performance - In Q3 2024, Huatian Technology's operating cash flow increased by 34 57% year-on-year, while financing cash flow grew by 78 43% [1] - The company's net cash balance increased by 464 75% year-on-year, reflecting improved investment capabilities and capital expenditure [1] - R&D expenses rose by 38 60% year-on-year, indicating continuous enhancement of R&D capabilities [1] - Financial expenses increased by 103 17% due to higher financing activities [1] Industry Outlook - The semiconductor industry is experiencing a strong recovery, with increased demand from upstream sectors driving growth [1] - Domestic substitution in the semiconductor industry is becoming more certain, with rising industry utilization rates leading to higher prices and volumes in downstream packaging and testing [1] - The company's advanced packaging capacity is expected to further enhance market share as new projects come online [1] Valuation and Forecast - The report forecasts Huatian Technology's net profit attributable to parent company shareholders to reach 674 million yuan in 2024, 958 million yuan in 2025, and 1 286 billion yuan in 2026 [1] - EPS is projected to be 0 21 yuan in 2024, 0 30 yuan in 2025, and 0 40 yuan in 2026 [1] - The company's PE ratio is expected to be 65 2x in 2024, 45 9x in 2025, and 34 2x in 2026 [1] - Compared to peers like Tongfu Microelectronics and JCET, Huatian Technology's valuation is slightly higher, justified by its advanced packaging capacity and potential for margin improvement [1] Financial Ratios - The company's ROE is expected to improve from 1 45% in 2023 to 5 17% in 2026 [5] - Gross margin is projected to increase from 8 91% in 2023 to 18 27% in 2026 [5] - Net margin is forecasted to rise from 2 46% in 2023 to 9 05% in 2026 [5] - The debt-to-asset ratio is expected to decline from 43 34% in 2023 to 24 85% in 2026 [5]