Event: On October 30, the company released its 2023 three-quarter report. In the first three quarters of 2023, the company achieved revenue of 879 million yuan, +9.46% year-on-year; realized net profit of 41 million yuan, +38.25% year-on-year; and achieved net profit of 16 million yuan, minus 49.38% year-on-year.
The results for the third quarter were in line with expectations, and the cost control was good: the company achieved revenue of 365 million yuan, +8.16% year-on-year, net profit of 37 million yuan, +38.48% year-on-year, and net profit after deduction of 38 million yuan, +32.81% year-on-year. The company's gross margin/net profit margin for the third quarter was 43.58/ 10.07%, +1.76/+2.2pct year-on-year respectively, and +6.24/-1.3 pct month-on-month respectively. The company's third-quarter results are generally in line with expectations. Fluctuations in gross margin and net profit margin are a problem with the revenue recognition structure. The total cost rate (excluding financial expenses) of the company during Q3 was 29.80%, -5.34pct year-on-year and -6.43pct month-on-month. The results of the company's expense rate management and control began to show.
Focusing on industrial AI, the three major fields are gradually advancing, and continued high R&D investment is expected to reap benefits:
The company invested 234 million yuan in R&D in the first three quarters of 2023, accounting for 26.62% of revenue, a year-on-year ratio of -0.5pct. High R&D investment continued to drive the progress of the product line. Looking at the medium to long term, 1) PCB sector: the product matrix is gradually improved, PCB AOI/AVI equipment has begun to form sales, PCB laser direct writing equipment (LDI) sales continue to increase, and PCB laser drilling equipment has begun to be tested by customers; 2) Intelligent driving sector: Tianzhun TADC-D52 advanced autonomous driving domain controller has obtained the first Horizon Matrix5 standard hardware certification, which is expected to begin official delivery to the front-loading market; 3) Semiconductor sector: Continue to deepen product upgrades of German MueTec subsidiaries and steadily promote participating subsidiaries Suzhou Silicon Bank semiconductor product progress. The TB1000, the first brightfield inspection device for detecting microscopic defects in the front end of semiconductors, was delivered to customers for trial in August.
Investment suggestions: We expect the company to achieve operating income of 1,881/25.04/309 billion yuan and net profit of 210/2.755/333 million yuan in 2023-2025. The corresponding PE was 31.59/24.09/19.91 times, respectively, maintaining the “increased holding” rating.
Risk warning: risk of downstream prosperity falling short of expectations, risk of new product development falling short of expectations, risk of worsening competitive landscape, risk of exchange rate fluctuations