Incidents:
The company released its 2023 annual report. In 2023, the company achieved revenue of 570 million yuan, a year-on-year increase of 16.49%, and realized net profit to mother of 74.2352 million yuan, a year-on-year decrease of 40.39%. Comments on this are as follows:
Performance was under pressure in the short term, and profitability declined due to multiple factors. In 2023, when the company achieved double-digit revenue growth, there was a sharp decline in profit, mainly due to several factors: 1. Gross margin declined due to industry competition. The company's gross margin in 2023 was 44.86%, down 8.69pct from the previous year; 2. Increasing new product development and overseas market expansion efforts, various expense ratios increased. In 2023, the company's sales/management/R&D expense ratio increased by 1.44/0.02/0.96pct, respectively; 3. Due to the increase in revenue scale, the scale of accounts receivable and increased market competition led to an increase in downstream Payment terms deteriorated, and the company's credit impairment losses increased by about 18 million yuan compared to the previous year; 4. Government subsidies decreased by about 15 million yuan compared to the previous year. The adverse effects of various factors were concentrated in 2023. Looking ahead to 2024, the company's profitability is expected to bottom up.
There are plenty of orders in hand, and the product matrix is constantly being enriched. At the end of 2023, the company's on-hand orders were 654 million yuan, and the bid amount for the full year of 2023 was 820 million yuan (including winning bids and unsigned contracts), an increase from 783 million yuan in 2022. The company is actively planning new products based on the development strategy of “cultivating coal, entering mining, and opening up the industry”. The company will form four main business lines currently and for some time to come: a dry sorting business line using photoelectric sorting+gradient sorting+fine grain screening, a wet sorting business line with digital cyclone+TCS+ flotation, an intelligent business line with a platform+instrument+unmanned module+information system, and a renewable resources business line using lithium battery recycling+metal recycling+garbage recycling+waste recycling and waste utilization.
Actively explore overseas markets and open the ceiling for growth. China accounts for about 50% of the world's coal production, and most of the remaining mineral resources are distributed overseas. The company's products are mainly aimed at coal and various minerals, and the layout of overseas markets is essential for the company to open up the growth ceiling. In 2023, the company began to fully explore overseas markets and successfully obtained overseas orders. The signed orders involved coal sorting and mining sorting. Currently, orders are concentrated in Mongolia. In January 2024, the company successfully obtained an order in Indonesia. Currently, the equipment has been shipped and is in the installation and commissioning stage.
Profit forecast: The company's net profit for 2024-2026 is expected to be 0.99 million yuan, 1.27, and 163 million yuan, respectively. The corresponding PE values are 18, 14, and 11 times, respectively, maintaining the “increase in holdings” rating.
Risk warning: New product development progress falls short of expectations; market competition further intensifies; profit forecasting and valuation models fail