occurrences

On April 9, 2024, the company released its quarterly report for the year 24. In 1Q24, it achieved operating income of 264 million yuan, a year-on-year decrease of 7.03%; net profit to mother was 0.3 billion yuan, a decrease of 49.66% over the previous year.

reviews

The company's profit declined significantly in 1Q24, mainly due to the fact that the current capacity utilization rate is still low. According to the company's announcement, the large decline in the company's profit in 1Q24 was mainly due to the increase in unit costs due to the fact that part of production capacity was not fully saturated, and expenses increased during the same period.

2Q24's performance is expected to improve marginally: According to the company's announcement, on the one hand, the company adjusted product prices and issued price adjustment notices for CNC tools, serrated tools, bar products, etc., to smoothly transfer the price increase of raw materials to the downstream; on the other hand, 1Q24 overall exports were good. At the same time, since March, inventory replenishment and demand will gradually improve domestic sales. 2Q24 We believe that performance is expected to improve marginally against the backdrop of a recovery in domestic demand and continued growth overseas.

The company actively lays out overseas markets, and a higher average export tool price is expected to drive an increase in the overall average price: the company achieved overseas sales revenue of 140 million yuan in 23, of which CNC tool export revenue was 111 million yuan, accounting for 19.27% of CNC tool revenue. The development of export business has begun to have a significant impact on the company's CNC tool sector, and exports are one of the important factors driving the company's future growth. At the same time, the average price of exported CNC tools is higher. The average price of exported CNC tools in '23 was 10.1 yuan/piece, which is higher than the company's overall average price. The increase in export share will also drive the company's average blade price increase.

The tool package program has entered the batch promotion and replication stage, and is expected to make a greater contribution to performance in 24 years: in 23, the company accelerated the development of tool package solutions for key customers and key scenarios, obtained a BMW crankshaft processing project, established a benchmark case for tool processing solutions in the automotive industry chain, formed a standard solution system in the fields of automobiles, 3C, aerospace, wind power, medical devices, etc., and entered the batch promotion and replication stage. In '24, it is expected that orders will gradually be converted into revenue in '23, and at the same time, the ratio of blade production is expected to increase, making a greater contribution to performance.

Profit Forecasts, Valuations, and Ratings

The company is expected to achieve net profit of 2.08/2.46/283 million yuan from 24 to 26, corresponding to the current PE17X/14X/13X, considering the growth space of the tool industry. At the same time, the company's overseas going+turnkey business in 24 is expected to contribute more growth in performance and maintain a “buy” rating.

Risk warning

Domestic substitution falls short of expectations, overseas growth falls short of expectations, and there is a risk that the ban on restricted stock sales will be lifted.