2023 results fell slightly short of our expectations
The company announced its 2023 results: In 2023, the company achieved revenue of 14.091 billion yuan, -5.82% year on year; net profit to mother was 820 million yuan, corresponding to profit of 0.78 yuan per share, -32.17% year over year. Considering the impact of downstream pressure on macroeconomic demand, the performance was slightly lower than our expectations. 4Q23 achieved operating income of 4.704 billion yuan, +6.93% year over year; net profit to mother was 184 million yuan, -6.13% year over year.
Gross margin declined slightly, and profitability continued to be under pressure. In 2023, the company achieved a gross profit margin of 34.94% and a net profit margin of 5.82%, a year-on-year decrease of 0.28ppt and 2.28ppt, respectively. In 2023, the company's sales expense ratio was 10.61%, up 0.36ppt year on year; management expense ratio was 7.64%, up 1.28ppt year on year; financial expense ratio was 0.07%, up 0.77ppt year on year; R&D expense ratio was 12.54%, up 1.79ppt year on year.
PCB equipment has declined a lot, and demand for new energy equipment is sluggish. 1) Information industry equipment revenue of 38.17 billion yuan, down 21.06% year on year, mainly due to the continued slump in demand in the traditional consumer electronics sector represented by mobile phones and notebook products. Among them, PCB equipment achieved revenue of 1,634 billion yuan, a year-on-year decrease of 5.91%; demand for lithium battery equipment was sluggish, and the company won TOPCON batch orders for photovoltaic equipment such as PECVD, diffusion furnaces, and annealing furnaces; 3) Semiconductor equipment (including pansemiconductors) revenue 21.26 100 million yuan, up 1.57% year on year; 4) General laser processing equipment revenue was 5.547 billion yuan, up 5.30% year on year. Among them, laser cutting machines and laser welding machine equipment achieved sales of 23.40 billion yuan and 613 million yuan respectively, up 13.24% and 10.50% year on year.
Development trends
Downstream demand is generally under pressure, and the company continues to step up new product development efforts. The company's downstream revenue is mainly domestic and is greatly affected by overall domestic downstream macroeconomic demand. In recent years, downstream demand for PCB equipment and new energy equipment, the company's main performance growth points, has all declined to varying degrees, which has dragged down the company's performance growth.
The company stepped up new product development efforts during the industry downturn: (1) In terms of photovoltaic equipment: the company independently developed perovskite laser marking equipment, achieved mass production and shipment, and maintained cooperation with leading customers such as GCL Optoelectronics; (2) the company has developed micro-LED massive transfer, micro-LED massive welding, and micro-LED repair equipment, which have been well verified; (3) The silicon carbide laser slicing equipment and laser annealing equipment developed by the company are preparing for large-scale mass production.
Profit forecasting and valuation
Considering weak downstream demand, we lowered the company's 2024 profit forecast by 29.7% to 997 million yuan and introduced a profit forecast of 1,141 million yuan for 2025. The current stock price corresponds to 20.0 times/17.5 times the price-earnings ratio for 2024/25. We maintain our outperforming industry rating, but considering that downstream demand is generally under pressure, the company continues to launch new products. We lowered our target price by 8.0% to 23.00 yuan, which corresponds to a price-earnings ratio of 24.3 times/21.2 times in 2024/25, with 21.4% upside compared to the current stock price.
risks
Downstream demand falls short of expectations; the expansion of the new energy sector falls short of expectations; PCB prosperity falls short of expectations.