Incident: The company released its 2023 annual report, achieving full-year revenue of 3.182 billion yuan, -7.80% year over year; net profit to mother - 323 million yuan, +13.92% year over year. Looking at a single quarter, 23Q4 achieved revenue of 1,129 billion yuan, -11.48% year-on-year; net profit to mother was 146 million yuan, +44.84% year-on-year.
The performance was in line with expectations. On the revenue side, the year-on-year decline in the company's revenue in '23 was mainly due to weak downstream demand compounded by tighter revenue recognition; on the profit side, the company continued to lose money since '21, mainly due to: 1) the company continued to increase R&D investment and marketing efforts for new products, maintaining high levels of R&D expenses and sales expenses; 2) accounting for significant impairment of goodwill and impairment losses on PPP projects. As the company progresses through the settlement and divestment of PPP projects in an orderly manner, focusing on the scientific instrument industry, the company's financial situation is expected to continue to improve.
The gross margin increased year over year, and the expense ratio remained high during the period. 1) Gross profit margin: The gross margin for 23 years was 41.26%, +3.94pct year-on-year. Among them, 23Q4 gross margin was 40.58%, +13.98 pct year over year, and -2.74 pct month over month.
The sharp year-on-year increase in gross margin in 23Q4 is mainly due to changes in the product structure of 22Q4 companies. Low-margin businesses account for a relatively high impact on gross margin levels. 2) Period expenses: The cost rate for the 23-year period was 55.36%, +4.64pct. Among them, sales, management, R&D, and finance expenses were 21.09%, 11.33%, 17.47%, and 5.47%, respectively, +1.47, +2.21, +1.06, and -0.10pct. Subsequent companies will adjust and shrink some business units, vigorously strengthen cost optimization for each business unit, and enhance cost control capabilities.
Develop high-end scientific instruments and extend and expand the life science circuit. During the reporting period, Puyu Technology completed technical research on a number of products. Many high-end analytical instruments have reached the international advanced or domestic leading level, filling domestic gaps and achieving import substitution. The 23-year Spectrotech contract and revenue achieved steady growth, and customer recognition for high-end mass spectrometry products continued to increase. At the same time, the company is expanding the field of life science. In recent years, new mass spectrometry products have successively obtained medical device registration certificates, entered the marketing stage, and signed contracts worth over 100 million yuan in 23 years. We believe that the company's high investment in R&D over the years is expected to usher in a harvest period, and that high-end analytical instruments are expected to accelerate domestic replacement and help grow performance.
Profit forecast: We expect net profit to be 1.93, 4.06 billion yuan, and 610 million yuan respectively in 2024-26, maintaining a “buy” rating.
Risk warning: impairment accrual risk, PPP project risk, new technology development falls short of expectations.