Incident: On April 29, 2024, the company released its quarterly report for the year 24. In 24Q1, it achieved revenue of 151 million yuan, -3.54% year over year; net profit to mother was 06 million yuan, -72.75% year over year. Net profit after deducting non-return to mother - $0.07 billion, -151.38% YoY.
The performance was in line with expectations. The decline in 24Q1 performance was mainly due to the high 23Q1 performance base due to the volume of policy interest rate discount orders at the end of '22. With the implementation of a new round of equipment renewal policies, performance is expected to recover quarterly.
Gross margin increased slightly, and R&D investment continued to increase. 1) Gross profit margin: In 24Q1, the company's gross margin was 54.81%, +0.58pct year over year, and -1.49pct month-on-month. 2) Period expenses: The 24Q1 company's expenses rate was 61.89%, +16.68pct year-on-year. Among them, sales, management, R&D, and finance expense ratios were 16.57%, 14.26%, 28.52%, and 2.54%, respectively, +0.54, +4.85, +9.09, and +2.21pct.
The significant increase in the company's management/R&D expense ratio is mainly due to 1) depreciation of the Shanghai subsidiary plant and Malaysian subsidiary's usage rights assets that have not yet been put into use, leading to +46.15% year-on-year management expenses; 2) Continued increase in R&D investment, leading to +41.57% year-on-year R&D expenses.
The 2024 draft equity incentive plan was released, demonstrating confidence in development. The company announced the 2024 Restricted Stock Incentive Plan to grant 2.80 million restricted shares to incentive recipients. A total of 80 people were involved in this incentive plan, including core key employees working for the company (including wholly-owned subsidiaries) and others that the board of directors believes need incentives. The equity incentive assessment indicators set by the company are: 1) based on 2023, with a year-on-year increase of no less than 30%/20% in 2024; 2) Using 2024 as the base, revenue/net profit growth of not less than 30%/20% year-on-year in 2025. We believe that the implementation of this equity incentive plan will, on the one hand, help enhance the company's competitiveness and motivate employees to work; on the other hand, it can focus on the company's future development strategy direction and stabilize the achievement of business goals.
Profit forecast: Considering that the equipment renewal policy is expected to drive further growth in the company's performance, it is estimated that in 2024-26, the company's net profit to mother will be 1.71, 2.31, and 310 million yuan, respectively, maintaining the “increase in holdings” rating.
Risk warning: New product marketing and customer development fall short of expectations; equipment renewal policies fall short of expected risks.