Earnings were in line with expectations, and changes in fair value dragged down short-term results
In 2023, the company achieved operating income of 1,072 million yuan/yoy +1.10%; net profit to mother of 312 million yuan/yoy +20.05%; 2024Q1 achieved operating income of 248 million yuan/yoy +12.89%; and net profit of 43 million yuan/yoy -23.13%. Considering fair value drag, we forecast net profit to mother for 2024-2026 to be $349/3.77/399 million yuan (previous value: 306/409 million yuan), corresponding PE 25/23/22 times. Comparatively, the company's 2024 PE was 27. Considering the layout in the field of multiple physical sensors and robots, we gave the company 30 times 2024, corresponding to a target price of 37.2 yuan (previous value of 35.1 yuan), maintaining the purchase rating.
Investment income increased net profit in '23. Net profit to mother in 24Q1 was dragged down by changes in fair value. In 2023, the company achieved operating income of 1,072 million yuan/yoy +1.10%, and net profit to mother of 312 million yuan/yoy +20.05%. The net profit growth rate was higher than that of revenue mainly due to disposal of transactional financial assets and increased investment by participating companies to increase investment income. 2024Q1 achieved operating income of 248 million yuan/yoy +12.89%; net profit to mother of 43 million yuan/yoy -23.13%; changes in fair value in a single quarter in 24Q1 dragged down net profit of 12.26 million yuan, mainly due to changes in the fair value of Chicheng shares.
Gross margin remained high in '23. The net margin for 24Q1 was 43.05% /yoy+2.81pct in 2023, driven by changes in fair value. Gross margin increased due to scale effects and continued to remain high; thanks to investment income, the company's overall net interest rate was 31.27% /yoy+5.28pct. 2024Q1's gross margin for the single quarter was 43.36% /yoy+2.58pct, and the net profit margin for the single quarter was 20.30% /yoy-6.21pct. Changes in fair value dragged down the net interest rate of 4.94 pct, mainly due to changes in the fair value of Chicheng shares invested by the company. In 2023, the company's sales expense ratio was 5.10% /yoy-0.31pct; the management expense ratio was 6.90% /yoy-0.16pct; the R&D expense rate was 9.13% /yoy+1.12pct, mainly due to increased R&D projects; and the financial expense ratio was 1.52% /yoy+0.54 pct, mainly due to increased interest expenses and exchange losses.
The strategic layout of multi-physical integration is accelerating, targeting new trends and boosting the robot sensor industry. The characteristics of the robot sensor industry are many categories, low single output value, and slow output, but high value, high barriers, and reuse of downstream customer resources. In 2023, the company accelerated the pace of investment layout, completed strategic investments in 11 projects, and initially formed an investment layout in six major fields, including industrial inspection and measurement, environmental equipment measurement, energy equipment, equipment monitoring, logistics, and platforms. Facing the new trend, 2024H1 is accelerating the research and development of digital six-dimensional force sensors on the basis of analog six-dimensional force sensors that have completed trial production, breaking through in the direction of low cost, low power consumption, low deformation, and micro size. In terms of flexible tactile sensors, the company actively cooperates with leading domestic startups by investing in mergers and acquisitions. In terms of torque sensors, the company has successively tested and sent samples to several domestic downstream manufacturers, which has been well received by downstream customers.
Risk warning: industry competition intensifies; downstream demand slows down; foreign investment falls short of expectations.