Incidents. The company released its 2023 annual report on March 26. In 2023, the company achieved a total revenue of 2,321 billion yuan, +25.76% year-on-year; realized net profit to mother of 318 million yuan, +21.13% year-on-year.
The company's business performance continues to grow, and overseas markets are actively expanding. In 2023, the company's revenue maintained a good growth rate. Depending on the product type, the product revenue of large processing centers totaled 959 million yuan, +14.98%, gross margin of 24.47%; vertical CNC machine tools generated a total revenue of 646 million yuan, +29.72% year-on-year, gross margin of 25.28%; horizontal CNC machine revenue was 692 million yuan, a significant increase of +41.83%, and gross profit margin of 30.20%. Classifying revenue by region, the company's domestic sales revenue in 2023 was 1,604 million yuan, +6.66% year on year; overseas sales revenue was 705 million yuan, +112.99% year over year. Domestic revenue increased slightly, and overseas revenue doubled; judging from the product category, horizontal machine tools increased the most, mainly due to the increase in overseas sales. Affected by increased competition in the domestic market, the company's gross domestic sales margin fell by 3.14 pct, and the overall gross sales margin was 26.46%, a decrease of 1.03 pct.
Driven by independent research and development and technological innovation, we help upgrade products. The company has long been committed to the R&D, production and sales of high-end CNC machine tools. In 2023, R&D investment totaled 102 million yuan, +24.22% year-on-year, accounting for 4.39% of total revenue. As of the end of December 2023, there were 251 R&D personnel, accounting for 20.23% of the total number of employees. At the same time, it has undertaken a total of 9 R&D projects, including a major national science and technology project “High-end CNC Machine Tools and Basic Manufacturing Equipment” and a special project for high-quality development of the manufacturing industry. It has achieved a series of R&D results in the field of high-end CNC machine tools, improved the overall performance of CNC machine tools such as accuracy, processing efficiency, and reliability, and shortened the technological gap with leading international standards.
Continuously strengthen the management of fund-raising projects, and the commissioning of projects to drive an increase in production capacity. According to the “2024 “Improve Quality, Increase Efficiency, and Heavy Return” Action Plan” issued by the company on March 30, the actual net capital raised after deducting issuance fees at the time of listing was 572 million yuan in September 2021. Since its listing, the company has used the capital raised to invest in the “Phase III High-end CNC Machine Tool Industrialization Project”, “R&D and Construction Project”, and supplementary working capital. By the end of 2023, the company had invested a total of about 490 million yuan, and the investment progress reached 85.57%. After the completion of the project, 2,000 new CNC machine tools were added every year, mainly including large-scale machining centers, vertical CNC machine tools, and horizontal CNC machine tools. In addition, the company's fourth phase of the high-end intelligent CNC equipment and core functional components project is about to be completed. It is expected to be put into operation in 2025, with an investment of no less than 700 million yuan to provide about 60,000 square meters of intelligent production plants and supporting facilities for the high-end intelligent CNC equipment and core functional components product line.
Investment advice. The company focuses on R&D innovation in the field of CNC machine tools, maintains high R&D investment, and is driven by independent innovation to help continuously improve product competitiveness. At the same time, fund-raising projects are being put into operation one after another, driving an increase in production capacity, steady growth in overall business activities, and overseas market expansion may be a growth point for future performance. The market space is broad, and for the first time, coverage has given a “gain” rating. We expect the company's net profit to be 370, 4.47, and 533 million yuan respectively in 2024-2026, EPS is 1.13, 1.37, 1.63 yuan, and PE is 17.3, 14.3, and 12.0 times.
Risk warning: risk of technological upgrading and iteration; risk of intellectual property infringement and disclosure; industry risk; macro-environmental risk.