Smart Cube released its 2023 semi-annual report. The company's performance declined in the first half of the year due to the consumer electronics slump, but the company increased investment in R&D. In the future, the company will benefit from Apple's MR expansion trend, and there is plenty of room for performance growth. Maintain buy ratings.
Key points to support ratings
The company's performance declined in the first half of the year. 2023H1 Company's revenue was 237 million yuan, +14.2% year on year, net profit was 36 million yuan, or -12.0%; net profit after deducting non-return net profit of 31 million yuan, -21.2% year on year; gross profit margin was 34.8%, -8.6 pcts year on year. 2323Q2 had revenue of 98 million yuan, +5.1% yoy, -29.4%; net profit of 0.08 billion yuan, -41.6% yoy /-73.3%; net profit after deducting non-attributable net profit of $03 million, -72.1% y/-87.7% yoy; gross profit margin 20.5%, yoy -19.7 pcts/-24.4 pcts.
Multiple factors affected the performance for the first half of the year, and the actual operating data was still good. The macro environment was sluggish in the first half of the year, and the company's revenue continued to grow despite poor demand. At the same time, the company accrued 12.28 million yuan in share payments in the first half of the year. If 2023H1 performance is added back, it can achieve positive year-on-year growth. In terms of gross margin, overall gross margin data declined due to steady growth in Q2 turnover, but as fund-raising projects progressed, the amortization of plant rent/renovation costs/personnel expenses increased.
Bucking the trend, increasing investment in R&D, and expanding business directions such as semiconductors and atomized electronics. In 2019-2022, the company's R&D expenses increased from 210 million yuan to 48 million yuan, and the R&D expenses rate increased from 7.5% to 9.5%. 2023H1's R&D expenses increased to 31.5 million yuan, a year-on-year increase of 40.6%, and the R&D expenses rate further increased to 13.3%. The company is focusing on improving the technical level in the fields of acoustics, optics, microelectronics, software algorithms, etc., to better expand its business to the semiconductor and atomized electronics industries.
Vision Pro has great prospects, and the company's equipment has a good card slot. In June 2023, Apple released the first generation of MR products, which became the driving force for long-term growth in consumer electronics. According to Weishen XR's forecast, global VR/MR shipments will reach 45 million units in 2027. MR's demand for optical and other sensor testing has increased dramatically. As an important supplier of optical inspection equipment to Apple, the company has a good card slot advantage. Currently, production line support has made great progress. We believe the company is expected to benefit from Vision Pro volume and gain long-term growth momentum.
valuations
Due to a slight decline in the company's overall gross margin and a slowdown in revenue growth in the first half of the year, we adjusted our profit forecast. We expect the company to achieve earnings per share of 1.94 yuan/2.70 yuan/4.22 yuan in 2023-2025, corresponding to a price-earnings ratio of 35.8 times/25.7 times/16.4 times. Maintain buy ratings.
The main risks faced by ratings
Risk of fluctuations in raw material prices; risk of high customer concentration; downstream demand falling short of expectations.