The company released the 2023 annual report and the 2024 quarterly report. The company released the 2023 annual report and the 2024 quarterly report. For the full year of 2023, the company achieved revenue of 3.852 billion yuan (+17.96%), net profit attributable to mother of 865 million yuan (+34.24%), net profit after deduction of 840 million yuan (+38.75%), and net cash flow from operating activities of 772 million yuan (+54.90%). In 2024, Q1 achieved revenue of $749 million (+8.61%), net profit due to mother of $146 million (+25.64%), net profit after deduction of $136 million (+24.25%), and net cash flow from operating activities of $120 million (+12.19%).
The product structure continues to be optimized, and the profit margin level is once again raised
The company's profit margin level continued to be optimized in 2023, with a gross margin of 40.32% (+4.55pct) for the whole year and a net margin of 22.51% (+2.72pct). By business, the compressor business's share of revenue fell from 53.2% in 2022 to 50.53% in 2023. The gross margin increased by 2.9 pct to 34.3% from 2022, while the share of vacuum business revenue rose to 42.63% from 39.08% the previous year, and gross margin also increased 5.3 pcts to 47.9%. The company's product structure has been further optimized, leading to an increase in overall profitability. The company's gross profit margin for Q1 2024 was 37.08% (+0.23pct), and the net margin was 19.58% (+2.63pct).
Refrigeration and compression equipment is growing steadily, and we are optimistic that air compression and vacuum products will continue to expand the refrigeration and compression field. The company has been deeply involved in the industry for many years. Demand in the commercial central air conditioning industry and refrigeration industry continues to grow in 2023, and the company continues to develop new models and update and upgrade existing organic models. Since 2024 is still a golden period of development for cold chain logistics, the company's refrigeration business is still expected to improve. At the same time, heat pumps are in line with the national dual-carbon development strategy, and there is broad scope for future development. In terms of air compression products, the company continued to invest in product research and development, and developed a silent oil-free scroll unit in the first half of 2023. Considering that the company's products have a high cost performance advantage compared to foreign brands, there is still plenty of room for development in the future. In terms of vacuum products, judging from the photovoltaic industry, there are still signs of expanding production in the cell sector, and the company's market share of vacuum products is expected to increase again. Looking at the semiconductor industry, products are constantly being updated and optimized. In the long run, the future can be expected under the dual drive of domestic substitution and autonomous and controllable supply chains.
Investment advice
The company's refrigeration equipment business is growing steadily, and the vacuum business still has room for improvement in the photovoltaic industry and semiconductor industry. We adjusted the company's profit forecast to: 2024-2026 to 42.35/48.47/5.58 billion yuan (the value before 2024-2025 was 4.72/5.55 billion yuan); net profit forecast to mother was 9.69/11.18/1.05 billion yuan (2024-2025 pre-2024 billion yuan); diluted based on the current total share capital of 535 million shares EPS was 1.81/2.09/2.44 yuan (the value was 1.95/2.32 yuan before 2024-2025). The PE ratio corresponding to the current stock price is 12/10/9 times, maintaining a “buy” investment rating.
Risk warning
1) The risk that the subsequent expansion of production in the photovoltaic industry will fall short of expectations. 2) The risk that customer expansion in the semiconductor industry falls short of expectations. 3) The risk of overseas market fluctuations. 4) The risk of large fluctuations in raw materials. 5) The risk of error in estimating market space.