Incident: The company released the 2023 annual report and the 2024 quarterly report. In 2023, the company achieved operating income of 386 million yuan, -1.32%; net profit to mother - 101 million yuan, -55.32% year on year; net profit after deducted from mother - 130 million yuan, -64.86% year on year; Q1 in 2024, the company achieved operating income of 08 billion yuan, -96.16% year on year; net profit to mother - 0.3 million yuan, year-on-year - 157.95%; net profit without return to mother - 35 million yuan, year on year - 162.17%
Key points of investment:
Fluctuations in demand have put pressure on performance, and it is expected that a recovery in order volume will drive performance repair. In 2023, the company's overall revenue was 386 million yuan, a year-on-year decrease of 1.32%. By product, intelligent monitoring, testing and control equipment and intelligent robots achieved revenue of 3.48 million yuan and 211 million yuan respectively, +85.63% and -93.26% year-on-year respectively. Among them, online monitoring products mainly include transmission line inspection, substation monitoring, and distribution network-related products. Since these products are relatively mature and customer investment is rigid, revenue has maintained steady growth throughout the year. However, the company's revenue for intelligent robot products declined sharply, mainly due to changes in downstream power grid demand, which led to a decrease in market orders. Considering that standards such as “Safety Requirements for Inspection Robots” and “Technical Requirements for Centralized Monitoring Systems for Inspection Robots” were introduced one after another during the reporting period, the company, as the main drafting unit and product supplier, is expected to continue to benefit from the increase in demand for robots in the context of smart grids; we expect that with the release of demand for intelligent robots and the recovery of orders, the company's robot product performance is expected to be repaired.
R&D rates remain high, and profitability has declined. In 2023, the company's gross margin and net margin were 43.52%/-26.10%, respectively, a year-on-year decrease of 6.16/9.51pct; in Q1 2024, the company's gross margin and net margin were 40.89% and -416.40%, respectively, and profitability declined further. In terms of cost control, the company's sales/management/ R&D/ finance expenses in 2023 were 19.75%/21.51%/33.74%/2.51%, respectively, -0.52/-0.01/+0.98/+2.09pct, respectively.
Among them, the company's R&D expenditure rate has exceeded 30% for two consecutive years. The main reason is that in addition to maintaining product R&D investment in the power sector, the company has also actively carried out R&D expansion in other industrial fields such as rail transit, ecological environment, underwater and high-end equipment, which has affected the company's performance to a large extent.
By increasing rail transit and the ecological environment, the promotion of commercialization is expected to contribute to order revenue. The company has continued to expand the application fields and application scenarios of robots and online monitoring products in recent years. Among them, rail transit and ecological environment are the company's key development directions, and its products and solutions have now entered the early stages of commercialization. For application scenarios such as rail transit operation and maintenance, inspection, and power supply, the company has successfully migrated application scenarios for robots and online monitoring products in the power field, and has developed new categories such as rigid contact network inspection robots to meet various needs in rail transit scenarios. In response to the needs of ecological environment scenarios, the company has developed products such as operation and maintenance inspection robots, operation and maintenance robots, and environmental operation and maintenance platforms, which can solve many pain points in the operation and maintenance process of ecological station buildings in a targeted manner, laying the foundation for speeding up commercialization and obtaining orders in the future.
Profit forecasting and investment advice. Considering that due to fluctuations in demand, the commercialization process of the company's intelligent inspection robot products fell short of expectations, so we lowered our profit forecast. The company's net profit for 2024-2026 is 0.73, 1.05, and 148 million yuan (the original 2024/2025 was 2.73 billion yuan), corresponding to PE 34, 24, and 17 times, respectively. Considering that the company has continued to increase R&D investment in recent years to expand the application areas of products, it will still take time for business orders in new fields such as rail transit and ecological environment to contribute to performance. Therefore, we lowered the company evaluation Level, which gives the company a “holding” rating.
Risk warning: Grid investment falls short of expectations; rail transit and environmental business development falls short of expectations; public data used in research reports may be delayed or not updated in a timely manner.