Incident: The company released its 2023 annual report. In 2023, it achieved operating income of 274 million yuan (yoy +34%), realized net profit of 15.41 million yuan, net profit of non-return to mother of 970,000 yuan, and net cash flow from operating activities of 21.48 million yuan.
Comment:
“Demand recovery+new product release” helped domestic business achieve 48% high growth. As new products in the company's dental series, electronic inspection series, and new energy battery testing series were launched one after another and the penetration rate gradually increased, the combined marketing efforts continued to strengthen. The company achieved operating revenue of 274 million yuan (yoy +34%) in 2023, of which 23Q4 achieved revenue of 92.34 million yuan (yoy +51%), and the growth rate was quite impressive. By business, in 2023, the company achieved revenue of 227 million yuan (yoy +30%) in the medical field and 40.83 million yuan (yoy +76%) in the field of industrial security inspection.
Looking at the subregion, thanks to the recovery in domestic demand and gradual batch delivery of new products, the company achieved impressive domestic business growth, achieving revenue of 143 million yuan (yoy +48%). As the company successively completed the establishment of European (Italian) subsidiaries and operated Korean subsidiaries, and achieved revenue of 124 million yuan (yoy +24%), we believe that as the company increases its business development efforts in overseas regions, especially in America, Europe, the Middle East, and the Asia-Pacific region, and the introduction of new products, overseas business growth is expected to accelerate.
Optimize the level of cost and expense control, and continuously improve profitability. In 2023, the company's gross sales margin was 39.65%, up 3.06 pp from the same period last year. We believe it is mainly due to the company's continuous cost optimization and product restructuring: ① The company seeks deep strategic collaboration in the industrial chain, increases production capacity upgrades and production scale effects, and optimizes costs. Furthermore, the company's sales expenses rate in 2023 is 9.99% (yoy-1pp), and the management expense ratio is 10.73% (yoy-4pp), and the R&D expense ratio is 16.29% (yoy-4pp) ( yoy-5pp). ② The gross margin of products in the field of industrial security inspection reached 52%, while the gross margin of the medical business was only 37%, accounting for 15% of the revenue from the industrial security inspection business in 2023 (yoy+4pp). Furthermore, the company is actively entering the high-end application field of CMOS sensors through investment, mergers and acquisitions and business integration, helping to continuously optimize the future upstream cost structure.
Profit forecast: We expect the company's revenue for 2024-2026 to be 3.42, 4.31, and 546 million yuan, respectively, with year-on-year growth rates of 24.8%, 26.1%, and 26.6%, respectively, and realized net profit of 0.43, 0.57, and 75 million yuan, with year-on-year increases of 178.9%, 33.4%, and 30.2%, respectively, corresponding to the current stock price PE of 24, 18, and 14 times, respectively.
Risk factors: New product promotion falls short of expectations; R&D progress falls short of expectations; downstream market demand rises short of expectations.