2023 and 1Q24 results are in line with our expectations
The company announced 2023 results: revenue of 356 million yuan, -20.1% year on year; net profit to mother of 84 million yuan, or -45.8% year over year. Demand for small-payload robots is weak, and the performance is in line with our expectations. The company announced its 2024 quarterly report, with revenue of 82 million yuan, -7.5% year on year; net profit to mother was 0.2 billion yuan, -18.4% year over year. Considering weak demand for small-load robots, the performance was basically in line with our expectations.
Harmonic reducers are under pressure, and mechatronics are steadily releasing volume. By product, revenue of harmonic reducers and metal parts/mechatronic products/intelligent automation equipment was -23.8%/+30.78%/+1891.92% to 3.2/0.3/0.02 billion yuan, respectively. Harmonic reducers were greatly affected by the demand of the downstream robot industry, and mechatronic products were steadily developing customers. In terms of gross margin, the gross margins of harmonic reducers and metal parts/mechatronic products/intelligent automation equipment were -7.6/-1.4/-18.8ppt to 41.2%/41.0%/-12.6%, respectively. The capacity utilization rate greatly affected the gross profit margin of harmonic reducers.
The scale effect puts pressure on profitability. In 2023, the company's sales/management/R&D/finance expense ratios were +1.7/+0.9/+3.3/-1.8ppt to 3.1%/6.2%/13.6%/-6.5%, respectively. The continuous increase in R&D cost rates is mainly due to continued investment in R&D of intelligent robot joints and mechatronic products. The company's gross margin in 2023 was 7.8ppt to 40.2% yoy. Affected by economies of scale, the net profit margin in 2023 was 11.2ppt to 23.6% yoy under the combined influence. 1Q24 profitability continues to be under pressure.
Development trends
Actively breaking the game in the short term, humanoid robots create a long-term curve. 1) Actively seeking growth breakers: The company lays out mechatronic integration to achieve high-precision high-load applications in multiple industries based on PCT international invention patents; in 2023, the company also accelerated the implementation of integrated high-precision, high-rigidity, closed-loop floating power control serialized high-end grinding equipment applications, and has established cooperation with leading customers such as mold polishing; 2) Humanoid robot pioneering layout: We believe that the rotating joints of humanoid robots may meet the needs of a large number of harmonic speed reducers. Green Harmonic is the earliest domestic manufacturer to contact and sample humanoid robot joints. At present, the company has developed a series of ultra-long-life, ultra-lightweight and ultra-compact harmonic speed reducers for humanoid robots. The accuracy and lifespan is at the leading international level, and we think it may be the first to benefit from industry trends.
Profit forecasting and valuation
Considering that demand for light-duty robots falls short of expectations, we lowered our 2024-2025 profit forecast of 22.5%/17.4% to 1.1/170 million yuan. Considering the recent increase in the valuation center of the humanoid robot sector, we maintain a target price of 145 yuan. The current target price implies that the industry is optimistic about mass production expectations for humanoid robots over the next 3-5 years. Currently, there is room for an increase of 19.8%, maintaining the “outperforming industry” rating.
risks
Demand from the manufacturing industry is weak, and the promotion of new products falls short of expectations.