Description of the event
The company released a report for the first quarter of 2023. 23Q1 achieved revenue of 244 million yuan, an increase of 80.89% over the previous year; Guimu's net profit was 102 million yuan, an increase of 96.01% over the previous year; after deducting net profit of non-Gimo's net profit of 100 million yuan, an increase of 97.37% over the previous year.
Incident comments
Q1 Performance increased. In 23Q1, the company's net profit was 102 million yuan, an increase of 96.01% over the previous year, and its single-quarter performance reached a record high. Net profit attributable to shareholders of listed companies before sharing equity incentive expenses was 124 million yuan, an increase of 76.31% over the previous year.
22Q4 Some uninspected orders were accepted and made up in Q1, and as production capacity was released, the company's revenue and profit continued to grow at a high level. Looking at the full year of '23, the company no longer accrued performance rewards ($508.30,800 in cash rewards for excess performance in 2022), and equity payment expenses were reduced. According to the report, it is expected that the growth rate of net profit attributable to the mother will be higher than revenue, and it will continue to achieve high growth.
Zhihong Precision supports the growth of the company's revenue and net profit. In 23Q1, Zhihong Precision achieved main business revenue of 233 million yuan, an increase of 90.61% over the previous year; Guimu's net profit was 114 million yuan, an increase of 83.51% over the previous year. Domestic power battery companies represented by the company's main customers, such as BYD, Funeng Technology, Xingheng Power, and AVIC Lithium Battery, have continued to expand production, which has led to an increase in demand in the lithium battery equipment market. The traditional main business accounts for a relatively small share and has remained stable. The road transport business segment achieved main business revenue of 6.8414 million yuan in 23Q1, a year-on-year decrease of 12.82%. In the road transport sector, the company mainly focuses on improving internal management efficiency and continuously and effectively promoting cost reduction measures to improve quality and efficiency while ensuring the company's steady operation.
Cutting dies have surpassed the growth of the industry, and the company's competitive pattern is good. The penetration rate of the lithium battery lamination process is gradually increasing. Lithium battery cutting dies are blades and tool holders used to cut electrodes in laminators or all-in-one cutters. They are the core components of the equipment. They have consumable properties, and production of laminated batteries continues to grow. The company has an excellent core team, leading technology and technology, and an experienced after-sales service team that can respond quickly, making the company highly competitive and customer stickier. Currently, the company has a high share in the industry, and the pattern is good. However, a good competitive pattern has also brought high profitability to the company, and the company's high gross margin is expected to be maintained in the next few years.
The downstream space of the mold is vast, and new applications are continuously being expanded. Zhifeng Technology, a subsidiary of Zhihong Precision, has successfully developed a variety of high-precision extrusion coating dies. The technical indicators & quality are superior to the same domestic products, and can be compared to the same products abroad. It has successfully served the lithium battery industry, OCR glass plate coating, etc. Among them, slit-type extrusion dies have been delivered in batches. In addition, the company's new die manufacturing business has successfully provided customized die services at the same level as imported brand dies for some leading lithium battery companies, and the die polishing business has successfully provided lithium battery companies with hundreds of die repair services. The downstream field of the mold industry is broad. The company is actively developing high-profit coating business and continuing to expand product categories, which is expected to contribute to increased revenue and performance.
Maintain a “buy” rating. The company's net profit for 2023-25 is estimated to be 544, 809, and 1,065 million yuan respectively, and the corresponding PE is 19, 13, and 10 times, respectively, and continues to be rated “buy”.
Risk warning
1. Market competition risk of potential new entrants;
2. Product upgrade and emerging technology route replacement risks;
3. Brain drain risk and company management risk.