The company released its 2023 annual report and 2024 quarterly report.

All year 2023:

1) Achieved revenue of 1,505 billion yuan, +22.68% year over year; realized net profit of 173 million yuan, +40.76% year over year; realized net profit without deduction to mother of 151 million yuan, +33.55% year over year.

2) Gross profit margin 27.25%, -0.58pct year on year; net profit margin to mother 11.51%, +1.48pct year on year; net profit margin without return to mother 10.05%, +0.82pct year on year.

2023Q4 single quarter:

1) Achieved revenue of 433 million yuan, +11.46% year over month, +3.13% month on month; realized net profit of 44 million yuan, +19.39% year on month, -14.9% month on month; realized net profit without return to mother of 43 million yuan, +45.93% year on year, +7.05% month on month. 2) Gross profit margin 24.58%, +0.01pct year on year, -4.75pct; net profit margin to mother 10.21%, +0.68pct year on year, -2.16pct month on month; net profit margin without return to mother 9.99%, +2.36pct year on year, +0.37pct month-on-month.

2024Q1 single quarter:

1) Achieved revenue of 273 million yuan, +2.08% year on year; realized net profit of 35 million yuan, +5.44% year on year; 2) gross profit margin of 30.44%, +0.86pct year on year; net profit margin to mother 12.95%, +0.41pct year on year; net profit margin without return to mother 10.83%, +0.5pct year on year. The cost rate for the period was 20.56%, +2.48pct year-on-year.

Looking at the whole of '23, overseas business expanded smoothly, and the consumables logic continued to be implemented. The company actively deployed overseas markets such as Southeast Asia, with overseas revenue of 171 million yuan in 23 years, an increase of about 31% over the previous year. Currently, the company's production capacity in Malaysia is about 5kw, and the two newly built plants are expected to be put into use in Q1. In addition, the company's consumables accounted for about 30% of revenue in '23, and is expected to increase further in the future. The continuous increase in the share of consumables is conducive to smooth performance fluctuations and is more friendly to cash flow. Reflected on the reporting side, the company achieved a net operating cash flow of about 120 million yuan in 2023, a significant increase over the negative value in '22.

Profit forecast and valuation: Net profit due to mother is expected to be achieved in 24-26 of 2.39, 3.10, and 385 million yuan. The corresponding PE is 18/14/11X, maintaining the “recommended” rating.

Risk warning: Overseas market expansion falls short of expectations, competition increases risk, geopolitical risk.