High growth was achieved in 23 years. The 24Q1 layout affected the profit growth rate of new product development and equity incentives. Total revenue was 1,845 million yuan, YOY +83.13%; net profit to mother was 182 million yuan, YOY +42.69%; net profit after deducting non-return to mother was 170 million yuan, YOY +60.86%. Gross profit margin 27.5%, YOY+0.16pct.

24Q1 achieved revenue of 274 million yuan, YOY +0.57%; net profit attributable to mother of 5.14 million yuan, YOY -81.88%; net profit of 3.73 million yuan after deducting non-return to mother, YOY -83.46%. Gross profit margin 26.33%, net profit margin 1.87%.

23 years of business spin-off:

1. Temperature control products for power electronic devices: achieved revenue of 1,195 billion yuan, yoy +199.77%, gross profit margin 25.48%, yoy-3.37pct.

2. CNC equipment temperature control products: achieved revenue of 606 million yuan, yoy +5.99%, gross profit margin of 31.15%, yoy+5.19pct.

Various segments (energy storage, semiconductor, hydrogen energy, etc.) have been steadily expanding in 23 years, opening up new opportunities 1) By region, the company achieved overseas revenue of 86.42 million yuan in 2023, yoy +41.51%, gross margin of 38.76%, yoy+16.95pct. In 2023, through ATF, a wholly-owned German subsidiary, the company opened a technical window to the world, seize opportunities to reach cooperation with well-known multinational companies in the industry in Europe, and facilitate cooperation with domestic manufacturing bases.

2) The energy storage temperature control sector achieved revenue of about 904 million yuan in 2023, successfully expanding high-quality customers in industries such as Ningde Era, Sunshine Power, CRRC, and China Airlines.

3) In addition, the company has expanded new fields such as semiconductor manufacturing, hydrogen energy, data centers, and new energy vehicles (charging and switching), and has successfully developed customers including well-known enterprises such as North China Chuang, Hedlisen, and Jizhi New Energy.

Profit forecasting

Judging from the financial statements, the company's 24Q1 sales, management, and R&D expenses all increased year-on-year, mainly due to factors such as the company's increased development of new products and processes, and amortization of equity incentive expenses. We are optimistic: 1) At the industry level, the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-in” issued by the State Council indicates that promoting equipment renewal and transformation in key industries is expected to promote the development of the high-end CNC machine tool industry; 2) At the company level, the company continues to explore multiple industries and customers such as energy storage, semiconductor equipment, and data center temperature control, which is expected to further open up the company's downstream market space.

Based on the pressure of the company's 24Q1 business performance, we adjusted the company's 24-26 operating income to 25.0, 33.3, and 4.32 billion yuan (the original value was 31.9 billion yuan and 4.74 billion yuan in 24-25 years), net profit of 2.5, 3.2, and 420 million yuan (the original value was 4.0 million yuan and 580 million yuan in 24-25), yoy +39.7%/+24.0%/32.6%, corresponding to the current valuation of 20, 16, and 12X PE.

Risk warning: macroeconomic fluctuation risk, market competition risk, raw material price fluctuation risk, technical risk, human resource acquisition and loss risk, scale expansion risk.