Key points of investment
Results grew steadily in 2023, 2024Q1 under pressure in the short term
In 2023, the company achieved revenue of 4.840 billion yuan, +0.59% year over year; realized net profit of 390 million yuan, +17.80% year over year; realized net profit without deduction of 328 million yuan, +4.88% year on year. 2023Q4 achieved revenue of 1,595 billion yuan in a single quarter, -9.72% YoY and -1.21% YoY; realized net profit of 161 million yuan, -3.99% YoY, +15.64%. By business: In 2023, automation equipment achieved revenue of 4.150 billion yuan, +1.31% year-on-year; jigs and components achieved revenue of 687 million yuan, -3.82% year-on-year. The company's performance grew steadily in 2023, mainly due to the company's breakthrough in sales of new products in the 3C field, while flexible modular production lines and MR equipment launched in response to customer needs have been partially delivered and formed sales.
The company achieved revenue of 743 million yuan in 2024 Q1, or -15.88% year on year; net profit to mother was -021 million yuan, -140.85% year over year. Short-term performance pressure was mainly due to Q1 accounting for a small share of annual revenue. Delays in acceptance confirmation of 3C projects led to loss in a single quarter due to delays in confirmation of 3C projects.
Profitability increased, and the cost rate remained basically stable during the period
In 2023, the company's gross sales margin was 33.8%, +1.5pct year-on-year. By business, the gross margin of sales of automation equipment, jigs and components was 33.27%/36.75%, respectively, and +8.76pct/-12.17pct, respectively. The main reason for the increase in gross sales margin in 2023 is that automation equipment is the company's main source of revenue, and the improvement of the company's supply chain system has reduced operating costs. The company's net sales margin reached 7.94% in 2023, +1.1 pct year-on-year. The company's expense ratio for the 2023 period was 23.7%, +1.2pct. Among them, the sales/management (including R&D) /finance expenses ratio was 7.3%/16.0%/0.4%, +0.40/+0.44pct, respectively. The main reason for the increase in sales expenses was that the company increased its market development efforts, leading to an increase in sales staff expenses and an increase in employee remuneration. 2024Q1's gross sales margin was 32.66%, -2.09pct year on year; net sales margin was -2.29%, down 8.23pct year on year.
Deeply cultivate the 3C industry and develop new fields such as semiconductors/low-altitude economics/transmission electron microscopes 1) Focus on key projects such as flexible modular production lines/MR equipment: At present, this flexible automated production line has been successfully mass-produced, and more than 40 production lines have been delivered to clients, which is progressing smoothly. The MR side has received proofing requests from major customers for second-generation MR production equipment, and is currently in a proofing state.
2) Develop new fields such as semiconductors/low-altitude economics/transmission electron microscopes: ① Semiconductors: In terms of high-precision eutectic machines, the new product Sunway EH9721 launched by the company has now received 400G/800G batch orders from well-known companies in the industry. The solidifier for major customer needs is still in the installation stage; in terms of AOI testing equipment, a new generation of products has been developed. ② Low-altitude economy: Bozhong Seiko's low-altitude economy business is carried out by the subsidiary Bozhong Robotics. It is mainly committed to providing integrated low-altitude inspection solutions deployed in a grid for smart city governance. The main product is an integrated global cruising information sharing system for open space. ③ Instrumentation: Since its establishment, the subsidiary Bozhong Instrument has focused on the research and development of transmission electron microscope products. Currently, it has developed the second-generation transmission electron microscope product BZ-F200. Its performance index is comparable to that of similar electron microscopes abroad, and the first commercial product is about to be delivered.
Profit forecast and investment rating: Considering that the 3C industry's recovery was lower than expected, we lowered the company's 2024-2025 net profit forecast to 4.92 (original value 5.38) 6.09 (original value 6.39) billion yuan, respectively, and gave the 2026 net profit forecast of 731 million yuan. The current stock price corresponds to dynamic PE of 20/16/13 times, respectively. Considering the company's future growth, we maintained an “gain” rating.
Risk warning: Risk of consumer electronics recovery falling short of expectations and escalating international trade frictions.