The company released its 2023 annual report. In 2023, we achieved revenue of 2.115 billion yuan, yoy +27.1%, net profit of 0.27 million yuan, yoy +45.7%, gross profit margin of 32.9%, yoy-1.2pct; 2023Q4 achieved revenue of 819 million yuan, yoy +18.43%, net profit of 61 million yuan, yoy -14.12%, gross profit margin of 33.4%, yoy-3.77pct.

Robotics and intelligent production lines and the CNC system and machine tool business have all achieved steady growth. The company's robotics and numerical control systems business both achieved steady growth in 2023. (1) Robots and intelligent production lines achieved revenue of 1.12 billion yuan, yoy +35.5% in 2023, of which the robot itself achieved 301 million yuan, yoy -9.8%, gross profit margin 19.96%, yoy-5.03pct; intelligent production line achieved 817 million yuan, yoy +66.3%, gross profit margin 29.43%, yoy-2.17pct. The company is one of the few robot manufacturers with completely independent intellectual property rights in China. It has strong production and technical advantages in terms of key robot components (control systems, servo drives, motors, bodies, etc.). The company's high-load series product line continues to expand, covering 210 kg, 300 kg and 360 kg, and has released a new series of industrial collaborative robot products, covering 5kg, 7kg, 10kg, and 16kg; in the field of intelligent production line, the company is a new energy power battery module & PACK line, wind power generation and energy storage, all-aluminum body laser welding line, We are committed to providing global customers with integrated solutions for intelligent manufacturing by digging deep into the fields of intelligent warehousing and logistics, smart factories, shoe manufacturing, etc. (2) CNC systems and machine tools: Achieve revenue of 892 million yuan in 2023, yoy +26.2%, gross profit margin 38.65%, yoy+2.76pct. ① In the field of high-end CNC machine tools, we will continue to play the company's strategic leading role in the high-end field. In April 2023, the company released a new model 8 high-end 5-axis CNC system product package. Fully integrate 5-axis processing technology with digital+network+intelligence+, and fully upgrade and iterate on key 5-axis CNC technologies such as high-quality 5-axis machining, CAM & CNC integration, in-machine measurement, and remote operation and maintenance to create a high-end 5-axis CNC system with Chinese power; ② In the field of intelligent CNC systems and intelligent machine tools, continue to use the Huazhong Type 9 intelligent CNC system as a platform, making full use of the system's spatial error and thermal error compensation, machine tool assembly quality evaluation, motion simulation and process optimization, Qianji CAM software, Inc_cloud, dynamic collision prevention, and energy feedback, etc. Cooperate with companies such as Shandong Haomai, Qinchuan Machine Tool, Jiangxi Jiashite, and Shenzhen Genesis; ③ In the field of general CNC machine tools, actively adjust strategies, adopt the policy of falling high-end technology, give full play to the technical advantages of the Huazhong 8 CNC system in supporting models such as turning, milling, grinding, and 3C, and continue to advance and steadily improve. In 2024, the company will provide efficient and automated solutions for equipment needs in key high-end areas, processing of key parts of new energy vehicles, processing of wearable device parts or backpanels, and laser processing of special-shaped parts of new energy vehicles.

Investment advice: The company has outstanding competitiveness in CNC systems, and the robotics business is developing rapidly. Under the trend of domestic substitution, we expect the company's CNC system sales to maintain rapid growth. The net profit from 2024-2026 is estimated to be 134/2.41/403 million yuan, respectively. The corresponding PE valuation is 45/25/15 times, respectively, maintaining the “recommended” rating.

Risk warning: The risk of macroeconomic recovery is lower than expected, and the risk of technological progress is lower than expected.