Incident: The company released its 2024 quarterly report on April 24. 1Q24 achieved revenue of 210 million yuan, YoY +54.7%, and net profit of 1.34 million yuan. The same period last year was -28.49 million yuan, after deducting non-net profit of 13.83 million yuan, and 31.96 million yuan for the same period last year. The performance was in line with market expectations. The company's rapid revenue growth in 1Q24 was mainly due to the expansion of the company's business scale and market application fields. The operating income of customized 3D printing products, self-developed equipment and raw materials all increased. Our comprehensive review is as follows:
1Q24 revenue grew rapidly by 55%, and net profit to mother turned a year-on-year loss into a profit. Driven by the three major categories of 3D printing customized products, self-developed equipment and raw materials, the company achieved 1Q24 revenue of 210 million yuan, YoY +54.7%; net profit to mother was 1.34 million yuan, compared to -28.49 million yuan in the same period last year. In terms of profitability, 1Q24 gross margin decreased by 7.4ppt to 41.3% year on year; net profit increased by 22.1ppt to 0.7% year on year. Against the backdrop of rapid revenue growth and reduction in share payment fees, 1Q24's net profit to mother reversed year-on-year losses.
Production capacity construction continues to advance, and applications in various downstream fields are being actively expanded. In terms of production capacity construction: At the end of '23, the company's projects under construction increased by 106.6% year-on-year to 340 million yuan compared to the beginning of '23, and the number of projects under construction at the end of 1Q24 increased by 29.2% to 440 million yuan compared to the beginning of '24. Looking at specific projects, according to the company's disclosure, 1) The C and D plots of the company's Phase III project will commence on March 15, 2024. After completion, they will effectively mitigate the problem of insufficient production capacity of additive manufacturing equipment and seize the “hot opportunity period” for the development of the industry. 2) On April 18, 2024, the company held a groundbreaking ceremony for the fourth phase of the project E, marking that the fourth phase of the project is about to enter the pre-delivery stage, which will greatly increase the production capacity of the company's customized products and raw material powders for metal additive manufacturing. The rapid progress in capacity building is expected to continue the company's pioneering advantage in the field of metal additive manufacturing. On the customer side, by the end of 2023, the company had provided a complete set of metal additive manufacturing solutions for more than 2,600 users around the world, including more than 30 commercial aerospace customers. At the same time, the company's products are widely used in various fields such as industrial machinery, energy and power, medical research, automobile manufacturing and electronics. The company actively expands customers in various fields to open up long-term growth space.
Continue to increase investment in R&D; actively prepare production and stock to meet strong demand. The cost ratio decreased by 19.8ppt to 53.5% year-on-year during the 1Q24 period, of which: 1) R&D expenses increased by 32.0% to 54 million yuan, R&D expenses decreased by 4.5ppt to 26.4% year-on-year; 2) the management cost ratio decreased by 11.9ppt to 16.0% year over year.
3) Sales expenses decreased by 0.6ppt to 10.3% year over year; 4) Financial expenses ratio decreased by 2.8ppt to 0.8% year over year.
As of the end of 1Q24, 1) accounts receivable decreased by 1.7% from the beginning of '24 to $1.01 billion; 2) inventory increased 17.9% to $610 million from the beginning of '24; 3) contract liabilities increased by 41.7% to $35 million from the beginning of '24.
The company actively prepares production and supplies to meet strong downstream demand.
Investment advice: The company is the leader in comprehensive metal 3D printing solutions in China. It has now completed the layout of the entire raw materials, equipment and service industry chain. Along with application expansion and continuous release of production capacity, the company continues to be optimistic about the company's first-mover advantage as a leader leading the development of the industry. The estimated net profit for 2024-2026 will be 330 million, 50 million, and 690 million yuan, and the corresponding PE is 46x/31x/22x, respectively. Considering the company's leading position in the entire industry chain and the high prosperity of the industry, it maintains a “recommended” rating.
Risk warning: downstream demand falls short of expectations; model batch production pace falls short of expectations; product price reduction, etc.