Incidents:
The company released its 2023 performance report. It achieved full-year operating income of 4.84 billion yuan, +0.6% year-on-year, net profit of 330 million yuan after deduction, +4.45% year-on-year, and net profit of 396 million yuan, or +19.4% year-on-year.
Steady revenue growth, improved product structure led to increased profitability
In 2023, the company achieved a breakthrough in flexible modular production lines, a new product in the 3C field. As of 2023/11/6, the company has delivered more than 40 production lines, contributing new growth points to the company's performance; in addition, the company's MR production equipment for major customers has been partially delivered and generated sales revenue. In 2023, the company achieved operating income of 4.84 billion yuan, +0.6% year on year; product structure improvements increased the company's gross margin, and the annual deducted non-net interest rate reached 6.7%, +0.25pcts year on year.
3C/new energy/semiconductor multi-dimensional layout, flexible lines and MR will continue to contribute new growth points and look forward to the future. The company is deeply tied to Apple in the 3C field, while also relying on deep underlying technology to expand vertically and horizontally to fields such as new energy/semiconductor/core components to create a multi-level growth curve:
1) 3C field: As a continuous and stable supplier to Apple, it continues to benefit from changes in new products and applications such as MR from major customers, mainly providing lenses and machine assembly equipment for the first generation Vision Pro. Currently, its second-generation related equipment products are also being tested; in addition, the new product “flexible modular production line” will continue to expand to other mobile phone processes and other terminal products for major customers, and continue to contribute growth points.
2) New energy sector: The domestic lithium battery equipment market is relatively under pressure, but the penetration rate of overseas NEVs is still low, and the company is expected to contribute incrementally; Ningde Era released the self-developed heavy truck chassis power exchange solution “Qiji Power Exchange”. The heavy truck power exchange business model is more mature, and the company will continue to benefit from the construction of heavy truck power exchange trunk lines; the automotive automation equipment market space is broad, and the company's layout is gradually breaking through core process links such as NEV flat wire motor rotors and stators.
3) Semiconductor sector: The company's high-precision eutectic chip mounters have been mass-produced and delivered to the field of optical modules, and are expected to continue to expand in the future as the market develops; two other products, high-speed high-precision crystal solidifiers and AOI equipment for chip appearance inspection, are also being successfully developed, contributing to a new growth curve.
4) Parts field: The company lays out the two major fields of servo transmission and machine vision. Most of the core products have entered the core supplier list for major international customers. In 2022, the parts business subsidiary Reimou achieved annual revenue of 240 million yuan, of which external sales revenue accounted for 45.32%. In the future, core components and the company's automation equipment business are expected to continue to develop collaboratively.
Investment advice:
We expect the company to achieve revenue of 48.4/63.1/7.54 billion yuan in 2023-2025, an increase of 0.59%/30.37%/19.50% year-on-year; in 2023-2025, net profit to mother of 3.96/6.07/752 billion yuan, respectively, an increase of 19.4%/53.3%/24.0% year-on-year.
Taking into account the company's leading position in the 3C automation field, we gave the company a 25xPE valuation, corresponding to a 6-month target price of 33.96 yuan, maintaining a “buy-A” rating.
Risk warning: Consumer electronics recovery falls short of expectations; risk of major customer Apple falling short of expectations; risk of MR sales falling short of expectations; risk of falling short of expectations in promoting new products such as semiconductors; risk of falling short of expected risk of profit forecasting.