Incidents:
On March 30, 2024, the company announced its 2023 annual report: in 2023, it achieved revenue of 1.84 billion yuan, a year-on-year increase of 88.7%, and realized net profit to mother of 133 million yuan, an increase of 1.97% over the previous year, and realized net profit without return to mother of 112 million yuan, an increase of 2.69% over the previous year.
Investment highlights:
The cutting business, the first main business, achieved good growth, and overseas gross margin increased significantly. (1) The company's sawing business revenue in 2023 was 670 million yuan, up 7.47% year on year, achieving net profit of 156 million yuan to mother, an increase of 16.56% year on year. Sales volume was 26.82 million meters, up 10.6% year on year. The average product price was 25 yuan/meter, a slight decrease from the average price of 25.73 yuan/meter last year. (2) The sawing business achieved domestic revenue of 470 million yuan, up 8.01% year on year, accounting for 25.5% of revenue; achieved overseas revenue of 200 million yuan, up 6.21% year on year, accounting for 10.9% of revenue. The company actively expanded overseas markets and maintained steady growth in exports; according to the company's public disclosure of investor relations information (2024/4/2), the company's bimetal band saw blade sales accounted for nearly 35% of the domestic market, and the company's products accounted for more than 40% of China's overseas export market. (3) The comprehensive gross margin of bimetallic band saw blades was 42.5%, up 0.8 pct year on year, domestic sales gross margin was 38.6%, down 0.7 pct year on year, export sales gross margin was 54.9%, up 7.9 pct year on year. The gross profit level of export business increased significantly, driving the overall profitability of the company's sawing business.
(4) By integrating and empowering Metson, we helped Metson achieve sales revenue of 92.63 million yuan, an increase of 42.5% over the previous year.
In the power supply business, the consumer electronics business declined, and a breakthrough was achieved in the high-power power supply business. (1) The company's power supply business achieved revenue of 1.17 billion yuan in 2023, an increase of 231.8% over the previous year. The main reason is that since September 30, 2022, the revenue included in the consolidated statement was 354 million yuan, so the year-on-year increase was significant. If compared with Platai Electronics' 2022 full-year data, the power supply business revenue fell 14.5% year on year, mainly affected by the continued downturn in the consumer electronics industry. The power supply business achieved net profit measured at fair value of 26.01 million yuan. The high-power power supply business is in the investment and construction period and has invested a large amount of resources; (2) the consumer electronics power supply business achieved revenue of 1.03 billion yuan, an increase of 221.0% year on year; the high-power power power supply business achieved a new breakthrough in strategic business revenue; (3) the overall gross profit of the power supply business was 4.67%, down 4.08pct year on year, with a year-on-year gross margin of 4.46%, down 1.45 pct year on year, and the gross profit margin of high-power power power supplies 2.09% year on year. The main reason for the decrease of 27.6 pct is that the high-power power supply business production line is in a period of investment, construction and capacity climbing, and low capacity utilization. Coupled with factors such as recruiting new high-power power supply business employees and investing in R&D, etc., the gross margin is low.
The fund-raising project progressed in an orderly manner, and the company's “sawing and power supply” dual business developed and upgraded. In 2023, the company completed refinancing work and raised 590 million yuan in net capital for the construction of new product production lines and new energy power bases, which is conducive to optimizing the structure of sawing business products and increasing profits in the power supply business, and promoting the development and upgrading of the company's dual main businesses. (1) Bimetallic band saw blade product upgrade, sales structure continued to be optimized: five new toothed high-speed steel band saw blade products were put into operation in 2023, achieving sales revenue of 30.33 million yuan, an increase of 76.2% over the previous year; in response to the growing needs of aerospace and other industries, CB-EMP high-speed and efficient sawing products were optimized to achieve sales revenue of 18.33 million yuan, an increase of 194.3% year on year. The market sales prospects were good. The revenue of high-end products was 416 million yuan, up 27.2% year on year, accounting for a 62.0% increase in sawing revenue, accounting for an increase of 9.6pct . (2) Consumer electronics power supply business restructuring and expansion of new energy power supply business: The power supply sector has increased R&D investment in ODM projects and actively expanded new ODM customers on the basis of consolidating existing shares. It has now successfully developed a new customer, completed factory inspection work, and will carry out trial production of new products, which is expected to bring new business growth and improve profits; at the same time, based on the household photovoltaic power supply business, the company has expanded to industrial and commercial photovoltaic power supplies, large-scale manufacturing capabilities, leading inspection capabilities, and major customer development and service capabilities Businesses such as point energy power supplies have enriched high-power power supply product categories. In the future, with the orderly release of production capacity in the company's high-power power supply and other production lines and the successive delivery of in-hand orders, the company's power supply sector performance will improve.
Profit forecast and investment rating: The company is actively expanding overseas sawing business. High overseas profit is conducive to overall profit improvement and structural optimization of the sawing business; successfully binding order growth from major customers and the release of production capacity in high-power power supply production lines, it is expected to drive the rapid expansion of the power supply business in the next two years. We estimate that the company's net profit due to mother in 2024-2026 will be 2.32/3.80/407 million yuan, corresponding PE 19/12/11 times. First coverage, giving a “buy” rating.
Risk warning: The downturn in the macro environment has led to the sawing business and power supply business falling short of expectations; the competitive pattern of sawing and power supply business deteriorates; the concentration of single customers is too high, and business orders from major customers fall short of expectations; the commissioning schedule of fixed increase projects falls short of expectations, risk of overcapacity after production; and secondary liquidity risk.