Core views:
24Q1 revenue was in line with expectations, and impairment losses dragged down profit levels. According to the company's report for the first quarter of 2024, the company achieved operating income of 549 million yuan, a year-on-year increase of 3.96%; realized net profit of 0.7 billion yuan, a year-on-year decrease of 3.03%; and realized net profit without deduction of 60 million yuan, a decrease of 10.10% over the previous year. Operating revenue increased slightly, which was generally in line with expectations. The reason for the year-on-year decline in profit levels was that the company recorded higher credit impairment losses and asset disposal losses in the first quarter, while non-operating income decreased by 48.9% year over year.
The third phase of the fund-raising project is progressing smoothly, and the fourth phase of the project will be completed within 2024. According to the “2024 “Improve Quality, Increase Efficiency, and Value Return” Action Plan” disclosed by the company on March 30, 2024, the cumulative capital investment progress of the three phase high end CNC machine tool industrialization projects, R&D center construction projects, and redistribution projects raised by the company's IPO has reached 86%. After the completion of the third phase of the project, the CNC machine tool production capacity will be increased by 2,000 units/year. The R&D center project will continue to improve the company's ability to independently develop parts and increase the company's overall machine autonomy rate. In addition, the construction of the fourth phase of the company's high-end intelligent CNC equipment and core functional components project is progressing smoothly. It is expected to be completed by the end of 2024 and put into operation in 2025.
Continuously optimize sales strategies and increase market promotion. According to the company's “2024 “Improve Quality, Increase Efficiency and Reward” Action Plan, the company's products are currently widely used in the fields of automobiles, new energy, aviation, construction machinery, molds, general equipment, etc., and the products are sold all over the country and more than 50 countries and regions, including the United States, Germany, Britain, and Italy. In the future, the company will continue to optimize sales strategies and enhance its influence in the industry.
Profit forecasting and investment advice. We expect the company's net profit to be 387/46/558 million yuan in 2024-2026, respectively. Considering the company's leading position in the field of CNC machine tools and the gradual release of production capacity in the third and fourth phase of construction projects, we gave the company a net profit of 25 times PE valuation in 2024, corresponding to a reasonable value of 29.62 yuan per share, maintaining a “buy” rating.
Risk warning. There is a risk of macroeconomic fluctuations, the risk that production expansion projects are progressing less than expected, and industry competition exacerbates risks.