Brief performance review
On March 25, 2024, the company released its annual report for the year 23, achieving operating income of 2,321 billion yuan, an increase of 25.76% over the previous year; net profit to mother of 318 million yuan, an increase of 21.13% over the previous year. Among them, 4Q23 achieved operating income of 582 million yuan, a year-on-year increase of 16.79% and a decrease of 7.82% month-on-month; realized net profit of 82 million yuan, an increase of 12.58% year-on-year and a decrease of 2.44% month-on-month.
Management analysis
The company's performance is excellent, surpassing the industry level: in '23, the company implemented fine management while improving product performance, strictly controlled material procurement, product design and various expenses, continuously improved product competitiveness, and achieved excellent performance. According to data from the China Machine Tool Industry Association, the machine tool industry's revenue fell 10.3% year on year and total profit fell 35.8% year on year in '23. The overall performance of the industry was weak, and the company's revenue and profit growth rate was significantly higher than the industry level.
Competition in the domestic market is fierce, and the company's overall gross margin has declined. It is expected to improve along with the recovery in domestic market sentiment. In '23, the company achieved gross profit margin of 26.46%, a year-on-year decrease of 1.03 pcts; achieved a net profit margin of 13.68%, a year-on-year decrease of 0.52 pcts. Mainly due to intense competition in the domestic sales market, the company's gross profit margin of domestic sales in '23 was 24.14%, down 3.14 pcts year on year. It is expected to improve with the recovery in the domestic manufacturing industry.
Overseas market revenue is growing at the same time as gross margin is increasing, which is expected to contribute significantly to the increase in performance in the future. The company achieved overseas revenue of 705 million yuan in '23, a significant year-on-year increase of 112.99%, and its share of revenue increased to 30.36%. While overseas revenue is growing at the same time, gross margin is also rising. The gross profit margin for overseas sales was 31.35% in '23, an increase of 3.58 pcts over the previous year. The company actively explores overseas markets and has established a dedicated overseas sales network. The products have been sold to more than 50 countries or regions, and the share of overseas revenue is expected to increase further in the future, contributing to a significant increase in performance.
Profit Forecasts, Valuations, and Ratings
The company is expected to achieve net profit of 375/445/536 million yuan from 24 to 26, respectively, corresponding to the current PE17X/14X/12X. Considering that the company's performance is better than the industry level and the share of overseas revenue has increased, it is expected to continue to maintain a high growth trend as production capacity expansion continues to maintain a high growth trend and maintain a “gain” rating.
Risk warning
The recovery in the machine tool industry fell short of expectations, and the ban on restricted stocks was lifted.