Core views:
The company released its 2023 annual report. In '23, the company achieved operating income of 2,321 billion yuan, a year-on-year increase of 25.76%, net profit of 318 million yuan, a year-on-year increase of 21.13%, net profit after deducting non-return to mother of 276 million yuan, an increase of 24.57% over the previous year. Both revenue and net profit to mother achieved a growth rate of more than 20%, and the growth momentum is good.
The revenue growth rate is relatively fast, and profit margins have been stabilized. 2023Q4 achieved operating income of 582 million yuan, a year-on-year increase of 16.79%, net profit to mother of 82 million yuan, an increase of 12.58% year-on-year, and annual revenue and net profit to mother increased 25.76%/21.13% respectively. While the scale of revenue grew rapidly, the company maintained a basic stability in profit margins. The annual gross margin decreased by 1.03 pct to 26.46%, and the net profit margin decreased by 0.52 pct to 13.69%, and the profit base market was relatively solid.
Sales of complete machine products increased at the same time, and the growth rate of horizontal products was outstanding. Sales of the company's three main models rose simultaneously in '23, with sales of large processing centers +14.98%, vertical product sales +29.72%, and horizontal product sales +41.83%. High-margin horizontal products now contribute more revenue than vertical products. Large, vertical, and horizontal products account for 41.33%/27.83%/29.80% of sales respectively.
Overseas revenue doubled, contributing to the main growth engine. In 2023, the company's overseas business revenue was 705 million yuan, up 112.99% year on year, with a gross profit margin of 31.35%, and domestic business revenue of 1,604 billion yuan, up 6.66% year on year, with a gross profit margin of 24.14%. The gross margin of overseas business is high. Currently, overseas revenue accounts for more than 30%, and the company is expected to continue to benefit from overseas business growth in the future.
Profit forecast and investment advice: We expect the company's net profit to be 391/4.79/570 million yuan for 2024-2026, respectively. Referring to comparable companies, considering the rapid expansion of the company's overseas business and the gradual reflection of scale effects, we gave the company a PE valuation of 25 times the net profit returned to mother in 2024, corresponding to a reasonable value of 29.90 yuan per share, maintaining a “buy” rating.
Risk warning: the risk of macroeconomic fluctuations, the risk of machine tool parts import supply chain, and increased risk of industry competition.