Brief performance review
The company disclosed its annual report for '23 and its quarterly report for '24: (1) Revenue of 582 million yuan in '23, +2.35% YoY; net profit to mother of 39.05 million yuan, or -42.06% YoY. (2) In 1Q24, the company achieved revenue of 116 million yuan, +18.2% year on year; net profit to mother - 7.26 million yuan, -251.57% year over year.
Management analysis
1. Due to the long introduction cycle of new products, revenue growth is slow in 2023, and high order growth is expected to accelerate revenue in 24 years. As new products developed by the company were put into the market one after another in '22, the year-on-year growth rate of new orders signed by the company was obvious. However, due to the long acceptance cycle for some of the company's new products and customized equipment, some orders have not yet been approved to confirm revenue during the reporting period, resulting in a slow revenue growth rate in 2023. By product, revenue from laser equipment/lasers in '23 was 419/49 million yuan, respectively, -1.78%/+17.69% year-on-year, respectively. Among laser equipment, semiconductor equipment revenue was 129 million yuan, -14.21% year over year, mainly affected by the decline in industry demand; revenue from new electronic devices was 159 million yuan, +23.22% year over year, mainly due to the recovery in consumer electronics demand. New products superimposed on automotive electronics gradually received orders from mainstream car manufacturers and leading automotive supply chain manufacturers; panel display equipment revenue of 60 billion yuan, -12.42% year over year, mainly due to corporate strategic adjustments, further contracted the front line in the panel display sector; revenue from the new energy sector was 71 million yuan, +42.70% year on year. Revenue mainly comes from photovoltaic perovskite thin-film solar cell production equipment, screen board laser plate making equipment, and laser film removal equipment in the lithium battery industry. While continuously developing new customers in the direction of new energy, the company continues to enrich the variety of equipment. By the end of '23, the products issued in the company's inventory were +25.7% YoY; as of 1Q24, the company's contractual liabilities were $147 million, +24% YoY. Since the first quarter, the company has continued to increase its business development efforts and actively participate in market competition. Orders have been delivered and accepted one after another, and revenue increased by 18.20% over the same period last year. The company focuses on technological innovation in the semiconductor field, new energy field and lasers, and insists on R&D investment to provide a solid guarantee for product structure adjustment and long-term healthy development.
2. Investment in R&D and sales expenses greatly drags down profits. (1) The gross profit margin in '23 was 46.6%, -3.09pct year on year, mainly due to a decrease in revenue from high-margin semiconductor equipment; the net profit margin was about 6.71%, -5.15pct year on year. The main reason was the total sales, R&D, and management expenses ratio of 44.94%, +4.47pct year over year. (2) In 1Q24, the company's gross profit margin was 49.3%, -2.05pct year on year, and the net profit margin was -6.28%. Mainly due to R&D expenses to support the expansion of new products and new businesses, the number of employees in the company increased, and related expenses increased.
Profit Forecasts, Valuations, and Ratings
The company's net profit for 2024-26 is estimated to be 0.57/0.78/107 million yuan. The current price of the company's stock corresponds to the PE valuation 43/31/23 times, maintaining a “buy” rating.
Risk warning
The downstream boom fell short of expectations; progress in new product development fell short of expectations.