Incidents:
Libertyco released its 2022 annual report and the first quarter of 2023: the company achieved revenue of 355 million yuan in 2022, a decrease of 3.76% over the previous year; the net profit of the mother was 45 million yuan, a year-on-year decrease of 35.71%. In the first quarter of 2023, the company achieved operating income of 97 million yuan, an increase of 24.68% over the previous year; it achieved net profit of 13 million yuan to the mother, an increase of 7.99% over the previous year.
Key points of investment:
Positive progress has been made in overseas expansion of pre-treatment products. In 2022, the company's water recycling products received important overseas orders, which were used as supporting equipment for customers to sell analytical instruments overseas, opening up a good breakthrough for the expansion of water recycling products in overseas markets. CDS, a subsidiary of the company, signed an agreement with a Japanese company to supply Empore strontium (Sr) separation and enrichment membranes over the next 4 years to meet customer needs for continuous testing of Sr content in nuclear sewage. The order amount is close to one million US dollars.
The triple quadrupole mass spectrometer was released, and solutions in the semiconductor field were upgraded. In 2022, the company's inductively coupled plasma mass spectrometer (ICP-MS) was successfully sold in semiconductor, medical, environmental protection, third-party testing, universities, nuclear industry, medicine and other fields. The company's inductively coupled plasma triple quadrupole mass spectrometer (ICP-MS/MS) was officially released on March 10, 2023. It mainly targets the semiconductor field and helps upgrade the company's semiconductor solutions.
Higher prices of raw materials have led to a slight decrease in gross margin and an increase in R&D expenses. In 2022, due to rising commodity prices, the cost of some of the company's raw materials rose. The company's overall gross margin was 47.71%, a year-on-year decrease of 0.73 pct. In 2022, the company's R&D personnel increased by 19 compared to 2021, and R&D expenses were 38 million yuan, an increase of 22.37% over the previous year, resulting in an increase of 2.31pct to 10.82% over the previous year.
Profit forecasting and investment ratings Considering the company's quarterly report and the large number of ongoing research projects, we expect the company's R&D expenses to remain high. Therefore, the company's net profit for 2023/2024/2025 was lowered to 0.57/0.65/76 million yuan. The corresponding PE was 54/47/40 times, respectively, maintaining the “increase in holdings” rating.
Risks suggest that the sales scale of mass spectrometers fell short of expectations; the implementation of ongoing research projects fell short of expectations; there was a risk that industry competition was becoming more intense; there was a risk that product gross margin would decline; and that the progress of laboratory engineering construction fell short of expectations.