Core views
The company announced an advance forecast for the 2023 performance increase. It is expected to achieve operating income of 1,232 million yuan and net profit of 148 million yuan in 2023. Revenue will maintain a high growth rate, and various expenses will affect the release of performance to a certain extent. As the application of metal 3D printing in the aerospace field continues to deepen, the company is expected to fully benefit from the active exploration of metal 3D printing in the consumer electronics field. The company plans to raise capital to build large-scale intelligent production base projects. The chairman's increase in holdings shows confidence in long-term development, and the company's performance is expected to grow rapidly in the future.
occurrences
1. The company issued an advance forecast announcement for its annual results for 2023. It is expected to achieve operating income of 1,232 billion yuan in 2023, a year-on-year increase of 69 million yuan, a year-on-year growth rate of about 87%, and net profit after deducting non-return to mother increased by 72 million yuan year-on-year, or about 240% year-on-year.
2. The company issued an announcement regarding the chairman and general manager's increase in the company's shares. On January 17, 2024, the chairman and general manager of the company, Mr. Xue Lei, increased his holdings of the company through centralized bidding through the Shanghai Stock Exchange trading system based on confidence in the company's future development prospects and recognition of the company's value. The number of additional holdings was 23,667 shares, with an average transaction price of 84.49 yuan/share. After the increase, he held 7213503 shares of the company, accounting for 3.75% of the company's total share capital.
Brief review
Revenue is expected to grow rapidly in 2023, and various expenses will affect performance to a certain extent, and the company's revenue is expected to maintain a high growth rate. The company announced an advance forecast announcement for its annual results for 2023. It is expected to achieve revenue of 1,232 billion yuan in 2023, an increase of 34.20% over the previous year. The increase in the company's revenue is due to the company's continued deepening in aerospace and other application fields, continuing to develop new equipment models, and continuously developing new markets and application fields.
Equity incentive expenses and financial expenses have affected the release of the company's performance to a certain extent.
The company expects to achieve net profit of 148 million yuan in 2023, an increase of about 87% over the previous year, and a net profit of 102 million yuan without return to mother, an increase of about 240% over the previous year. The amortization of the company's equity incentive costs in 2023 will be included in management expenses. In addition, the expansion of the company's business scale and increase in bank loans in 2023 are expected to lead to an increase in financial expenses, both of which will affect the release of the company's performance to a certain extent. However, as equity incentive fees are reduced and funds raised are put in place, the company's subsequent fee rate will be reduced, and the release of performance is expected to accelerate.
The application of metal 3D printing in the aerospace field has further deepened, and the rapid increase in the penetration rate in the consumer electronics field GE has confirmed the feasibility of large-scale application of metal 3D printing in aero engines. The GE9X engine has 304 3D printed parts, covering six types of 3D printed parts: fuel nozzles, T25 sensor housings, heat exchangers, guides, stage 5 and 6 low pressure turbine blades, and combustion chamber mixers. The application of 3D printing has brought lower costs, simplified supply chains, better product performance, and shorter development cycles.
GE of the United States expects parts manufactured by direct additive manufacturing of metal to account for 50% of aero engine components in the future, reducing the weight of each large aero engine developed by at least 454 kg. Currently, GE has a production capacity of 35,000 to 40,000 pieces of fuel nozzles per year, and has been used in Airbus A320neo, Boeing 737MAX, COMAC C919, and Boeing 777-8 models.
Metal 3D printing is widely used in the manufacture of satellites and rockets. Companies such as Thales and Boeing have applied 3D printed metal to mass production of satellite platforms and payloads. 85% of the components of the Humanity 1 rocket designed by Relativism are manufactured using 3D printing technology. The application of 3D printing in the aerospace field has significantly optimized structural design, reduced weight, shortened manufacturing cycles, and reduced manufacturing costs.
The penetration rate of titanium alloy 3D printing in the consumer electronics sector is rapidly increasing. The MagicV2 axle cover of the folding screen released by Honor on July 12, 2023 uses a titanium alloy 3D printing process for the first time. Compared with aluminum alloy, the width is reduced by 27% and the strength is increased by 150%, driving the overall thickness and weight of the folding screen to decrease. In addition, Apple will also use titanium alloy 3D printing technology on the Apple Watch. Honor and Apple's application of metal 3D printing technology may indicate that the cost of metal 3D printing has dropped significantly and rapidly expanded into the industrial market.
Platinum cooperates closely with domestic aviation, satellite and rocket customers, and its expansion in the industrial field has also been very effective. In terms of aviation development, in 2019, Platinum used BLT-S310 equipment to manufacture various components for China Aviation Development's additive manufacturing engine project to help it carry out integrated design research on engine parts structures and achieve integrated printing. In terms of satellites, the 1000 times 1 star is the largest additive manufacturing star structure in the world. It was designed and developed by the Fifth Academy of Aerospace. Some lightweight parts are printed by the BLT-S600. The company is also responsible for the structural optimization design and printing production of the satellite deployer frame for the “Dalian 1-Lianli Satellite” high-resolution remote sensing satellite. In terms of rockets, the company has established a comprehensive and long-term strategic partnership with the Sixth Aerospace Academy. The BLT-C1000 has become a special aircraft with high-performance manufacturing of large frame and beam components for various engines. The company has also printed some rocket parts with private rocket companies including Deep Blue Aerospace, Blue Arrow Aerospace, Interstellar Honor, and Oriental Space. In the industrial sector, the company achieved revenue of 174 million yuan in the industrial sector in 2023H1, with a year-on-year growth rate of 111.06%, indicating that the company's expansion in the industrial field has achieved remarkable results.
A fixed increase in funding to build a large-scale intelligent production base project. The chairman's increase in holdings showed long-term development confidence. The company raised 3,029 billion yuan by issuing shares to 14 specific targets, mainly to build large-scale intelligent production base projects for metal additive manufacturing.
The company plans to invest 2,509 billion yuan to build a high-quality metal 3D printing raw material powder production line, an efficient and high-precision metal 3D printing customized product production line, and build a production workshop and plant, with a total construction area of about 163,200 square meters on the land the company plans to purchase. The project is equipped with a total of 505 units/set of automatic metal 3D printing powder production lines, product inspection and testing equipment, large/oversized 3D printing equipment, and post-processing equipment. The construction of the project will greatly increase the production capacity of the company's customized metal additive products and raw material powders, meet the rapidly growing demand for additive manufacturing in aerospace, medical and automotive applications, and also meet the company's and industry's demand for metal additive manufacturing powders. Through the construction of this project, the company will further consolidate its leading position in the industry and achieve rapid growth in the company's performance.
The chairman increased his holdings of the company's shares, demonstrating confidence in long-term development. The company issued an announcement regarding the chairman and general manager's increase in the company's shares. On January 17, 2024, Mr. Xue Lei, the chairman and general manager of the company, increased his holdings of the company through centralized bidding through the Shanghai Stock Exchange trading system, based on confidence in the company's future development prospects and recognition of the company's value. The increase in holdings was 23,667 shares, with an average transaction price of 84.49 yuan/share. After the increase, he held 7213503 shares of the company, accounting for 3.75% of the company's total share capital. Furthermore, the company is expected to continue to achieve the goals of the restricted stock incentive plan issued in 2020, and equity incentives will protect the company's long-term development.
Profit forecast and investment suggestions: The company is a leader in metal 3D printing. It has blossomed a lot in the aerospace and industrial fields. The application of metal 3D printing in the aerospace field continues to deepen, the industrial sector is actively exploring the application of metal 3D printing, and the metal 3D printing market space is broad. The company is a domestic metal 3D printing leader. Its business covers the entire metal 3D printing industry chain. The company has the ability to carry out iterative optimization of all links in the industry chain and has significant cost advantages. In addition, the company is also actively carrying out domestic replacement work for core components of 3D printing equipment, which is expected to get rid of import dependency and further reduce costs. The company plans to raise funds to build large-scale intelligent production base projects. The chairman's increase in holdings shows confidence in long-term development. As the company's revenue scale continues to expand and expenses are further reduced, future performance is expected to grow rapidly. We expect the company's revenue for 2023-2025 to be 12.32, 17.47, and 2,387 billion yuan, up 34.14%/41.89%/36.60% year on year, and net profit to mother of 1.49, 3.08, and 468 million yuan, up 87.04%/106.80%/52.07% year on year. Corresponding PE is 96X, 46X, and 30X respectively, giving a “buy” rating.
Risk analysis
1. Risk of unaudited performance: The company's current performance forecast is a preliminary estimate made by the company's financial department based on its own professional judgment. It has not been audited by a certified public accountant, and the company has not discovered any major uncertainties affecting the accuracy of the content of this performance forecast.
2. The risk that the downstream customer sector is concentrated: Customers in the aerospace sector contributed a lot to the company's revenue. In the first half of 2023, the company's revenue from customers in this field accounted for 52.29% of the company's main business revenue, and the company's top five customers were also concentrated in this field. Although important application fields such as aerospace play a leading role in the development of additive manufacturing at home and abroad, as far as the current situation is concerned, additive manufacturing still accounts for a limited share of the overall manufacturing system. If additive manufacturing applications in this field grow less than expected, or if major customers are lost due to factors such as the company's product quality and industry competition, it will adversely affect the company's business development.
3. Risk absorption of additional production capacity: The large-scale intelligent production base project funded by the company will greatly increase the production capacity of the company's customized metal 3D printing products and raw materials. Currently, the company's downstream customers are mainly customers in the aerospace sector, but most models of equipment developed by the company have not yet been mass-produced. Furthermore, if the subsequent demand for metal 3D printing from industrial customers falls short of expectations, it will also affect the company's product demand situation, and the company may face the risk that the new production capacity cannot be fully absorbed.
4. Risk of reliance on imports for key core components of additive manufacturing equipment: China's industrial additive manufacturing equipment core components are still quite prominent. The core components imported by the company are mainly lasers, scanning galvanometers, and electrical components for motion control systems. Some of the core components of the company's equipment have a certain dependence on foreign brands. If these core devices are affected by factors such as trade bans or regulations in the exporting country, the company may not be able to procure in a short period of time as needed, which will adversely affect the company's production and operation.