2023 performance: revenue of 2,321 billion yuan, +25.76% year over year; net profit to mother of 318 million yuan, +21.13% year over year; net profit without return to mother of 276 million yuan, +24.57% year over year.
23Q4 performance: revenue of 582 million yuan, +16.79% year on year; net profit of 82 million yuan, +12.58% year on year, -2.38% month on month; net profit without return to mother of 66 million yuan, +21.3% year on month, -12% month on month.
The results are in line with the express report previously announced, and the volume of overseas markets is expanding. The company actively explores overseas markets. Its products are sold all over the country and to more than 50 countries and regions, including the United States, Germany, the United Kingdom, Italy, and Brazil. In 23 years, overseas revenue was 705 million yuan, an increase of 113% over the previous year, and exports accounted for 30% of the revenue, +12pct year on year.
Affected by the domestic industry climate, the revenue growth rate was 7.5%, which is superior to the overall performance of the industry.
By product category, thanks to the release of the company's third-phase production capacity and the increase in the company's order acceptance, production and sales of the company's three major product categories all increased year-on-year. Among them, horizontal machine tools increased the most, with revenue up 42% year on year, reaching 692 million yuan, accounting for 30% (+4pct year on year). Mainly, horizontal machine tool exports were high, and overseas sales growth led to an increase in the horizontal share; followed by vertical machine tools, which increased 30% year on year, accounting for an increase of 1 pct, and gantry machine revenue increased 15% year on year, accounting for a decrease of 3 pct.
Gross profit margin declined somewhat due to increased competition in the domestic market. While improving product performance, the company comprehensively controlled product costs to improve product competitiveness. The gross margin of export sales increased by 3.58 pct to 31.35%. However, due to increased competition in the domestic market, the gross margin of domestic sales decreased by 2.95 pcts year on year to 24.33%, so the comprehensive gross margin decreased by 1.03 pct to 26.34%, and the net margin decreased by 0.52 pcts to 13.69%.
The cost rate is stable. The company's 23-year sales expense ratio and R&D expense ratio were basically the same year on year. The management expense ratio decreased by 0.28 pct, and the financial expense ratio increased by 0.15 pct due to exchange losses.
The fourth phase of the new production capacity is progressing steadily. The company has begun construction of the fourth phase of the high-end intelligent CNC equipment and core functional components project. It is expected to be completed by the end of 2024 and put into operation in 2025. With the fourth phase put into operation, the company's production capacity will be significantly increased.
Maintain an “overweight” investment rating. The company's 23-year performance is in line with expectations, and its export contribution is expected to rise to the next level driven by the recovery of the domestic manufacturing industry; in the long run, the company, as the first tier of domestic machine tools, is expected to continue to replace imported Japanese and South Korean products and increase its market share. We expect the company's 24-26 revenue to be 26.7/30/3.3 billion yuan, up 15%/12%/11% year on year, and net profit to mother of 3.65/4.11/465 million yuan, up 15%/13% year on year. The corresponding PE is 18/16/14 times, maintaining the “increase” rating.
Risk warning: Demand falls short of expectations, increased competition in the industry, and risk of overcapacity.