Description of the event
The company released its 2023 annual report. In 2023, we achieved operating income of 671 million yuan, +6.34% year over year; realized net profit of 108 million yuan, +16.72% year over year; realized net profit without deduction of 60 million yuan, +27.60% year on year. After conversion of 2023Q4, the company's operating income was -8.5% YoY, net profit to mother -5.81% YoY, and net profit not attributable to mother +0.07% YoY.
Incident comments
The company's 2023Q4 revenue and net profit declined year-on-year, but the month-on-month growth rate was high. The boom in the instrument industry in 2023 was under pressure, affecting the company's product demand. Combined with the impact of the 2022 Q4 high base, the company's 2023Q4 revenue and net profit declined year-on-year. However, demand for a slowdown in the company's revenue growth rate due to product changes was basically eliminated, and revenue and net profit returned to mother increased month-on-month. 2023Q3, the company is in the product replacement period. On May 18, the company officially released the DHO900/800 high-resolution digital oscilloscope for the first time. In the third quarter, customers and dealers were in a period where demand was switching from the old series of products to the DHO series, and demand was delayed. The impact of 2023Q4 has been significantly mitigated, and sales revenue for DHO series products increased by 193.79% year over year. It is expected that the deferred revenue impact caused by product switching will be fully eliminated by 2024.
High-end new products have received good feedback, and platform-based expansion is expected. Revenue and performance are expected to be fully released in 2024. On September 17, 2023, the company released a new product in the DS 80000 series, which supports up to 13 GHz analog bandwidth per channel and a real-time sampling rate of up to 40 GSa/s, which is the highest level of domestic oscilloscopes. By the end of 2023, the new products had achieved a certain level of shipment acceptance. Due to the late release time, sales were relatively small throughout the year, but since the release of the new products, feedback from the downstream demand side has been good. In 2023, the company's high-end (bandwidth ≥2 GHz) and high-resolution (vertical resolution ≥12 bit) digital oscilloscopes accounted for 54.29% of total digital oscilloscope sales, a significant increase from 41.65% in 2022. The company promoted RF products, and the Xi'an R&D Center was put into operation. Sales revenue of RF instruments increased 14.41% year-on-year in 2023.
Adhering to the process of high-end products has a significant effect on driving gross margin. The company's gross margin reached 56.45% in 2023, an increase of 4.06 percentage points over the previous year. Among them, the gross margin of digital oscilloscope products was 58.26%, an increase of 3.31 percentage points over the previous year. High-end and self-developed core technology platform products significantly contributed to the gross margin of digital oscilloscopes.
Acquired Endurance Electronics to lay out the field of test and measurement solutions. Durable electronic products include intelligent digital array products, digital antenna platforms and components, quantum measurement and control systems, and modular array platforms. This acquisition is due, on the one hand, to the company's emphasis on the talent team and customer resource advantages of Endurance Electronics. On the other hand, Endurance Electronics is a solution-oriented enterprise, which is beneficial to enhance Puyuan Precision's ability to provide customized system solutions for segmented application scenarios in the field of RF engineering systems and measurement systems. Benchmarking overseas leaders, Shide Technology has achieved transformation and upgrading from a hardware company to a comprehensive solution provider with “hardware+software+service” as the core through several mergers and acquisitions. With the gradual improvement of the company's hardware capabilities, the company also aims to gradually transform from a hardware-based electronic measuring instrument supplier to a comprehensive solution provider.
Looking ahead to 2024, the company's first year of 13 GHz deployment, the current intended orders are expected to gradually transform into revenue and performance. In terms of hardware, the company continues to explore upgrades and develop into an electronic measurement platform-based enterprise; in addition to hardware, the company is also planning to transform and upgrade to a solution provider. The company is expected to achieve net profit of 1.63/2.10/266 million yuan in 2024-2026, corresponding to a price-earnings ratio of 42/32/26 times, and maintain a “buy” rating.
Risk warning
1. Risk that product development and technology development progress falls short of expectations; 2. Risk of failure to successfully introduce high-end talents and talent loss.