Revenue growth accelerated in 23Q4. Revenue growth for the year was in line with our report's expectations. In 2023, Meiya Optoelectronics released its annual report. In 2023, it achieved revenue of 2,425 million yuan (yoy +14.55%), net profit of 745 million yuan (yoy +2.02%), deducting non-net profit of 695 million yuan (yoy -1.14%). Among them, Q4 achieved revenue of 768 million yuan (yoy +24.39%, qoq +11.36%) in a single quarter, and revenue growth accelerated from the 23Q level of 316%, to net profit of 182 million yuan (yoy +4.90%, qoq -16.23%).
Considering the decline in the company's gross margin exceeding expectations, we slightly lowered our 24-25 profit forecast and added a 26-year profit forecast. The company's net profit for 2024-2026 is estimated to be 8.2, 9.4, and 1.0 billion yuan, respectively (down 11% and 8% from the previous values of 9.24 billion yuan and 1,024 billion yuan in 2024-2025), corresponding to PE 21/18/17 times. Comparable companies unanimously expected an average PE value of 50 times in 2024. Considering that the company's 3-year compound profit growth rate was lower than that of comparable companies, the company was given 24 times PE in 24 years, with a target price of 22.3 yuan (previous value of 21 yuan), maintaining a “gain” rating.
Revenue from various businesses accelerated in the second half of the year. The color sorter and industrial X-ray inspection machine performed well. The company's color sorter/CBCT/X-ray industrial inspection machine business achieved revenue of 14.8/7.6/160 million yuan respectively in the full year of 23, +19%/+6%/+61%, respectively. Of these, 23H2 revenue was +30%/+9%/+74%, respectively, up from the first half of the year. The company's color sorter product capabilities continued to improve during the year. A number of new color sorters leading the development of the industry were released during this period, such as the industry-first UV color sorter, UHD deep learning color sorter, and integrated plastic bottle sorting equipment. In addition, the company also released the first domestic Internet platform for the grain and food industry to promote the digital transformation of the rice processing industry. In terms of industrial inspection equipment, the company released a new X-ray inspection machine for small and medium-sized packaged, bottled and canned food, bringing users a better user experience.
CBCT gross margin declined slightly due to structural changes and price competition
The company achieved gross profit margin of 51.5% for the whole year, -1.48pct year on year, net profit margin of 30.7%, and -3.77pct year on year.
Among them, the gross margins of the color sorter and CBCT business were -0.17 and -2.22pct, respectively. The gross margin of the CBCT business declined to a certain extent. Among them, 23H2 gross margin fell by about 2.7 pct month-on-month, mainly due to the company's 23Q4 active participation in price competition and the increase in the share of mid-range and low-end products during the year. The new clinics added in China in '23 mainly came from inland and second- and third-tier cities, which led to a downgrade in the consumption structure of CBCT products.
Increase investment in cloud platforms to maintain a high dividend ratio
The company's 23-year sales/management/R&D/finance expense ratios were 11.67/4.27/6.13/ -2.07%, respectively, compared to +0.91/-0.79/+0.34/+2.51pct, respectively. The increase in financial expenses was mainly due to a decrease in exchange earnings. The slight increase in R&D expenses was mainly due to an increase in R&D investment in cloud platform projects such as Meiya Zhiyun and Meiya Zhilian. At the same time, the company plans to distribute a cash dividend of 7 yuan (tax included) for every 10 shares, totaling 620 million cash dividends. The corresponding dividend rate is about 3.6%, and the dividend rate is 83%, which is basically the same as the same period last year.
Risk warning: 1) The competitive landscape in the CBCT industry worsened beyond expectations; 2) the recovery in demand for dental treatment fell short of expectations; 3) the risk of exchange rate fluctuations.