Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 610 million yuan, +32.7% year on year; realized net profit of 130 million yuan, +32.3% year over year. 2024Q1 achieved revenue of 120 million yuan, +23.5% year over year; realized net profit of 26.279 million yuan to mother, +28.4% year over year. The performance achieved rapid growth.

The aerospace sector has performed well, and the internationalization strategy continues to advance. By sector, the company achieved revenue of 370 million yuan in the aerospace sector in 2023, +120.6%. The main reason is that the company continues to deeply cultivate the aerospace field and continue to explore markets and applications; the industrial sector achieved revenue of 170 million yuan, or -25.1% year over year. The company adheres to internationalization and global business layout. Its overseas business has covered more than 30 major countries and regions around the world. It promotes the company's brand by participating in international 3D printing industry exhibitions such as AMUG, Rapid and Formnext. At the beginning of 2024, the company's North American subsidiary announced a partnership with Novastar Solutions, one of the largest 3D printing solution providers in the Detroit region, to further expand the additive manufacturing market in the north-central US region.

Profitability is excellent, and the cost ratio is continuously optimized during the period. In 2023, the company's gross profit margin and net profit margin were 51.6% and 21.6%, respectively, -1.7pp and -0.1pp year-on-year, respectively; the cost ratio for the period was 28.5%, or -0.9pp.

In 24Q1, the company's gross profit margin and net margin were 53.9% and 21.1%, respectively; the year-on-year expense ratio was 30.9%, -2.8pp year-on-year, with management and sales expense ratios of -1.7pp and -1.8pp, respectively. The company's gross margin remains at a high level, and the scale effect of the high increase in revenue is evident, and the cost ratio is expected to continue to decline.

Fund-raising projects are progressing steadily, and capacity construction has opened up room for growth. On January 30, 2024, the main structure of the first phase of the company's manufacturing R&D and manufacturing headquarters project was capped. The total construction area of the project is about 140,000 square meters, which exceeds the construction area of the existing 3D printing industrial park by 6 times, including facilities such as scientific research buildings, production plants, shift buildings, and supporting warehouses. The first phase of the project is scheduled to be fully completed in June 2024 and officially put into operation by the end of 2024.

After the project is completed and put into operation, it will resolve production capacity bottlenecks and open up the company's growth ceiling.

Profit forecasting and investment advice. The company's net profit due to mother in 2024-2026 is estimated to be 1.8, 2.8 billion yuan, and 390 million yuan respectively, corresponding to EPS of 0.43, 0.66, and 0.93 yuan. Corresponding to the current share price PE is 57, 37, and 26 times, and the compound net profit growth rate for the next three years is 43%. The 3D printing industry is in a period of accelerated development. The company is the leading domestic metal additive manufacturing equipment, enjoys the dividends of industry development, and maintains a “holding” rating.

Risk warning: Risks such as reliance on imports for key core components, replacement of technology routes, and unsatisfactory progress in fund-raising projects.