Description of the event
The company released its three-quarter report. Revenue for the first three quarters was 254 million yuan, -26.26%; net profit for the first three quarters was 73 million yuan, -43.36%; net profit after deducting non-return net profit was 66 million yuan, -36.78% year-on-year.
Looking at a single quarter, 23Q3 had revenue of 82 million yuan, -18.42% year-on-year; net profit of 22 million yuan, -39.88% of the same period; net profit after deducting non-return net profit of 221 million yuan, -24.90% year-on-year.
Incident comments
The company's performance in the first three quarters of 23 years was under short-term pressure, waiting for downstream industry demand to recover. As market demand for 3C electronic products and semiconductor industries is sluggish, the demand for the company's downstream industrial robots and other industries is under pressure. According to the National Bureau of Statistics, in September 2023, the domestic industrial robot was 36,000 units/set, a year-on-year ratio of -14.3%; in January-September, the cumulative output was 325,500 units/set, an increase of 0.4% over the previous year, and the industry continued to bottom out. Although the industrial robot industry is cyclical, the long-term trend of machines replacing humans has not changed. Coupled with the rapid development of lightweight robots such as collaborative robots, the harmonic reducer track still has potential for growth.
The decline in profitability is mainly due to the decline in capacity utilization. 23Q3 Company's gross margin was 40.52%, down 11.15 pct year on year, up 0.38 pct month on month; net profit margin was 27.20%, down 8.79 pct year on year, down 5.19 pct month on month.
The decline in profitability is expected to be mainly due to price cuts due to industry competition and a decline in the company's capacity utilization rate due to a slowdown in industry demand. In terms of expenses, 23Q3's sales/management/R&D expense ratio was 2.81%/7.53%/12.09%, year-on-year +1.09 pct/+2.65 pct/+0.13pct, but the financial expense ratio was -13.25%, year-on-year -8.12 pct, mainly due to an increase in interest income. Overall, the company's fee rate for the 23Q3 period fell 4.26 pct year on year, mitigating the impact of the decline in gross margin to a certain extent.
The imminent mass production of humanoid robots is expected to open up room for growth. As Tesla's humanoid robots continue to iterate, the harmonic reducer is the definitive T-chain solution, and mass production release will bring greater demand elasticity. Combined with the current progress of domestically produced humanoid robots, the implementation of the humanoid robot industry chain may progress or accelerate. The company is the domestic leader in harmonic reducers. It has cost advantages, technical advantages, and production capacity advantages. Combined with the channel advantages of strategic cooperation with Sanhua Intelligent Control, it is expected to gain a first-mover advantage in future humanoid robot expansion opportunities and open up room for growth.
Maintain a “buy” rating. In the future, the company's layout from core components to functional components will gradually improve. Combining key technologies such as mechanical, electrical, and liquid, product technology barriers are raised and rich application scenarios are superimposed, and humanoid robots have opened up room for growth. It is expected that net profit of 1.10, 1.49, and 255 million dollars will be achieved in 2023-2025, corresponding to PE of 222x, 164x, and 96x, respectively.
Risk warning
1. The risk that downstream demand falls short of expectations;
2. The risk of increased competition in the industry.