Cutting orders increased, and net profit attributable to mother increased by 52%
The company released its annual report, with 2023 revenue of 1,407 million yuan (yoy +56.61%), net profit of 729 million yuan (yoy +52.01%), deducting non-net profit of 674 million yuan (yoy +44.60%). Q4 revenue was 416 million yuan (yoy +69.07%), and net profit to mother was 157 million yuan (yoy +68.71%). Net operating cash flow was $861 million, up 39.0% from the same period. The company's profit increased in 2023, mainly benefiting from the continuous increase in the number of orders for the laser processing control system business and the sharp increase in the number of orders for the intelligent cutting head business. We believe that the company will use its technical advantages to seize opportunities for high-power cutting and expand, and the second growth curve represented by intelligent welding is also expected to open up at an accelerated pace. EPS is expected to be 6.71/9.10/12.23 yuan in 24-56, comparable to the company's average 24E51.1x PE (Wind), giving 24E 51.1xPE, and the target price is 343.20 yuan, a “purchase”.
Based on technical advantages+synergy, seizing high-power cutting/overseas application scenario expansion opportunities in the sub-business segment, follow-up system revenue was 170 million yuan, down 20.6%, board card system revenue was 374 million yuan, bus system revenue increased 67.0%, bus system revenue was 327 million yuan, up 93.9%, cutting head revenue was 335 million yuan, up 106.5%, other revenue was 190 million yuan, and 69.2%; the decline in revenue from follow-on systems sold separately was mainly due to product line updates integrating the functions of the synchronous system, which was sold separately.
The rest of the business has achieved rapid growth, mainly due to the continuous growth in domestic demand for high-power thick plate cutting and the continuous expansion of foreign application scenarios, and the synergy between the company's software and cutting heads has continued to expand its technical advantages in high-power scenarios, further driving the continuous increase in domestic market share. In 2024, the brand's influence on the end user side may continue to expand as the company tries to build its own overseas marketing capabilities.
Gross margin increased year-on-year, and profitability is expected to continue to increase
The company's profitability improved. The overall gross profit margin in 2023 was 80.3%, up 1.4 pct year on year. Among them, the gross profit margin of the following system/board system/bus system/cutting head was 86.7%/82.3%/86.5%/77.4%, and the profitability of all businesses increased. The net interest rate fluctuated mainly due to the share payment fee of 104 million yuan confirmed by the company in 2023 (0.17 million yuan in the same period last year).
The company has five basic technologies, and its products have strong market competitiveness. Furthermore, in terms of costs, the company resolutely improves the level of quality management, operational risk management, and financial risk management and control capabilities. We believe that as the company's high-power products continue to be promoted based on the advantages of software and hardware collaboration, and refined management continues to advance, the overall profitability is expected to continue to improve.
The second growth curve represented by intelligent welding may gradually open
Based on the horizontal expansion of industrial automation, the company lays out the fields of precision processing and intelligent welding. Among them, in the intelligent welding business, the company created a complete teaching-free intelligent welding solution, and has signed a strategic cooperation agreement with Honglu Steel, a leading manufacturer in the steel structure industry. In 2024, the company will also continue to increase reasonable investment in related resources in R&D and business for intelligent welding and precision processing, with a view to further speeding up the marketization of related products. As the implementation of intelligent welding accelerates, the company's second growth curve is expected to gradually open up.
Risk warning: macroeconomic fluctuations; technology implementation results fall short of expectations.