Incidents:
The company released its 2023 annual report. In 2023, the company achieved operating income of 1,407 billion yuan, a year-on-year increase of 56.61%, and net profit to mother of 729 million yuan, an increase of 52.01% over the previous year. Comments on this are as follows:
Performance is growing rapidly, and gross margin is rising steadily. In 2023, the company still ranked first in the domestic market share of medium- and low-power laser cutting control systems, and further consolidated its leading position in ultra-high power technology, and the market share of high-power control systems continued to increase; in line with domestic equipment makers' “collective overseas plans”, the company's continuous breakthroughs in overseas markets further boosted the company's performance growth.
In 2023, the company's gross margin increased by 1.36 pct year on year, reaching 80.33%. The company's gross margin continued to maintain a high level of high level, showing strong market competitiveness.
Software and hardware are developed collaboratively, and the intelligent cutting head business is rapidly expanding. The control system and cutting head are all core components of laser cutting machines. The company relies on its outstanding advantages in the field of control systems to expand the cutting head field vertically. The intelligent cutting head product launched by the company has excellent synergy with its traditional superior business cutting system. The combination of the two can achieve more advanced automation functions through “software and hardware collaboration and intelligent control”. For example, in the plane cutting direction, the company's control system is equipped with an intelligent cutting head, which can achieve intelligent functions such as nozzle quality inspection, automatic nozzle cleaning, automatic nozzle replacement, automatic alignment, and closed loop seam width, further improving the automated production capacity of laser cutting equipment. In 2023, the company's smart cutting head revenue reached 335 million, a year-on-year increase of 106.51%, and the growth logic continued to be fulfilled.
Expand the intelligent welding and precision processing business horizontally to create multiple growth poles. In terms of intelligent welding, the company vigorously develops complete solutions for intelligent welding offline programming software, intelligent weld tracking systems, and intelligent welding control systems to solve the pain point where it is difficult to achieve high automation in small-batch, flexible processing scenarios for various types of non-standard workpieces; in terms of precision processing, the company develops high-performance galvanometer control systems, builds ultra-fast precision micro-nano processing system construction projects, and promotes the import replacement of high-precision motion control systems in high-end domestic equipment. In November 2023, the company signed a strategic cooperation agreement with Honglu Steel Structure, and it is expected that application scenarios for intelligent welding systems will gradually open up. With the accelerated evolution of “machine replacement”, the company's intelligent welding business may usher in a period of harvest.
Profit forecast: The company's net profit for 2024-2026 is estimated to be RMB 9.88, 12.78 and RMB 1,655 million, respectively, with corresponding PE values of 42, 32, and 25 times, respectively, maintaining a “buy” rating.
Risk warning: Market competition intensifies; profit forecasting and valuation models fail