Key points of investment
Affected by the international environment, downstream demand was weak, and revenue and profit declined in Q4 and throughout the year:
In 2023, the company achieved revenue of 1.04 billion yuan, -5.1% year on year; realized net profit of 143 million yuan, -23.1% year on year; realized net profit without deduction of 132 million yuan, -16.6% year on year. Among them, the 2023Q4 single quarter achieved revenue of 257 million yuan, -9.0% year-on-year, and -7.6% month-on-month; realized net profit to mother of 0.27.5 million yuan, -22.3% year-on-year, and -11.0% month-on-month. The decline in the company's 2023 performance was mainly affected by factors such as the international environment, geopolitics and weak investment in downstream equipment, and weak demand in the machine tool industry. By business revenue: In 2023, high-end CNC machine tools/mid-range CNC machine tools/intelligent automated production lines/equipment components achieved revenue of 6.00/3.12/0.84/100 billion yuan respectively, -1.58%/-5.57%/-2.28%/-22.75% year-on-year respectively.
Under the slump in the industry, the profit side is under pressure in the short term, and we are optimistic about restorative growth in 2024:
In 2023, the company's gross sales margin was 24.7%, -1.6pct year-on-year. By product, the gross margin of high-end CNC machine tools in 2023 was 27.93%, -1.83 pct; the gross margin of mid-range CNC machine tools was 18.91%, -1.37 pct; the gross margin of intelligent automated production lines was 17.74%, -2.14 pct; and the gross margin of equipment components was 27.33%, -2.71 pct year on year.
The company's net sales margin reached 12.9% in 2023, -3.1 pct year-on-year. The cost rate for the period reached 11.7%, +0.3 pct year on year, of which the sales/management (including R&D) /finance ratio was +0.24pct/+0.50pct/-0.42pct. Looking ahead to 2024, we expect the company's profit side to achieve restorative growth with the gradual recovery of the downstream general manufacturing industry and the company's product restructuring.
Continuing to increase self-production of core functional components, new products are expected to drive rapid growth in performance:
The company continues to increase self-production of core functional components to enhance product competitiveness. The company always adheres to R&D and innovation, and continues to consolidate the application advantages of the mold industry. The R&D side closely follows industry needs. The direction of CNC machine tool product development is shifting from general-purpose machines to industrial models, developing and improving new functions such as product serialization and category expansion in the export market, and developing and improving new functions such as intelligent compensation. The development of core functional components revolves around industry pain points and focuses on the development and customization of core components for five-axis models. The company's new production capacity focuses on booming industries such as new energy, aerospace and military industry, and performance is expected to grow rapidly as production capacity is released.
Profit forecast and investment rating: Considering that the recovery of the manufacturing industry was lower than expected, we lowered the company's 2024-2025 net profit forecast to 1.80 (original value 2.21) /2.29 billion yuan (original value 2.85) billion yuan, respectively, and gave the 2026 net profit forecast of 273 million yuan. The current stock price corresponds to dynamic PE 15/12/10 times, respectively. Considering the company's future growth, we maintained a “gain” rating.
Risk warning: Raw material prices fluctuate, manufacturing recovery falls short of expectations, and industry competition intensifies.