Q1 Revenue and profit declined
Meiya Optoelectronics released its quarterly report. In Q1 of 2024, revenue of 331 million yuan (yoy -18.57%, qoq -56.86%), net profit to mother was 101 million yuan (yoy -19.30%, qoq -44.46%), deducting non-net profit of 96.102 million yuan (yoy -21.97%). Subsequent contract liabilities indicate that there are plenty of orders in hand, and profit forecasts will not be adjusted for the time being. The company's net profit to mother for 2024-2026 is estimated to be 8.2 billion yuan, 9.4, and 1.0 billion yuan, respectively. Comparable company Wind unanimously expected the average PE value to be 48 times. Considering that the company's 3-year compound profit growth rate was lower than that of comparable companies, the company was given 23 times PE in 24 years, with a target price of 21.4 yuan (previous value of 22.3 yuan), maintaining a “gain” rating.
The decline in revenue is due to the impact of weak base and demand. It is expected that the company's 24Q1 revenue decline will gradually be repaired in the future. We estimate that the main reason is 1) CBCT sales in the past quarter were mainly concentrated after the Lantern Festival, with fewer purchases a year ago. The Spring Festival in '24 was later than the same period in '23, which led to a shorter number of actual sales days for the company; 2) the intensification of competition in the CBCT industry had a continuing impact on the price side; 3) Overall demand in the 24Q1 dental industry was weak. It is worth noting that the company's 24Q1 contract debt (mainly pre-sale payments) increased by 32 million yuan compared to the end of last year, indicating that there is some support for on-hand orders, and the growth situation is expected to gradually improve in the future.
Profitability has declined due to increased competition, and the increase in personnel has led to an increase in profitability. In terms of profitability, the company achieved a gross profit margin of 51.09% and a net profit margin of 30.45%, year-on-year in 24Q1, -2.7 and -0.27pct, respectively. The decline in gross margin was mainly due to increased competition in the color sorter and CBCT industries. In terms of cost ratios, 24Q1 sales, management, R&D, and finance expense ratios were +3.51/+2.01/-7.91 pct, respectively. The increase in sales and management expense ratios was mainly due to a decline in revenue compounded by an increase in the number of personnel and an increase in labor remuneration. The decline in financial expenses was mainly due to a sharp increase in exchange earnings due to the appreciation of the US dollar.
Risk warning: 1) The competitive landscape in the CBCT industry worsened beyond expectations; 2) the recovery in demand for dental treatment fell short of expectations; 3) the risk of exchange rate fluctuations.