[Investment points
Incident: The company released performance reports for the year 23 and 24Q1. Revenue was -14%/-6%, respectively, and net profit to mother was -43%/-80%, respectively. In '23/24Q1, we achieved revenue of 2.54 billion yuan/610 million, -14%/-6% year over year; total revenue of 140 million/0.1 billion, -43%/-80% YoY; deducted not 130 million/3.89 million, -46%/-87% YoY. The gross profit margin for the year 23/24Q1 was 37.2%/38.1%, -1.0pct/-0.6pct; the net sales margin for the year 23/24Q1 was 5.6%/1.1%, and -2.8pct/-4.0pct, respectively; the cost ratio for the period was 31.2%/33.2%, +3.2/-1.1pct year on year, and the performance fell short of market expectations.
Release of motor production capacity, strong competitiveness of hollow cups & servos: In '23, the company's revenue for controlling motors and their driving systems was 2.07 billion yuan, -11%, of which: 1) Stepper motors: downstream textile, security, communications and other industries are under pressure, compounded by shrinking domestic demand and intensifying industry competition. We expect Stepper's revenue to decline in '23. In the medium term, the company's Vietnam factory has been completed and began mass trial production, which is expected to increase the company's overseas market share and ensure supply stability; 2) Brushless motors: revenue of 170 million yuan, or -3%, of which sales of products related to hollow cups were +80%, mainly driven by medical equipment and other industries; 3) Servo systems: revenue was +16%, mainly emerging industries such as photovoltaic/lithium batteries, robotics, and 3C introduced new customers; 4) Precision transmission systems achieved revenue of 78 million yuan, of which industrial automation applications of precision linear transmission systems increased by more than 10%.
Emerging high-value-added fields are flourishing, and businesses in traditional fields need to recover. The company continues to lay out motion control services for use in emerging industries (mainly corresponding to overseas markets), but due to the 2023H2 overseas market supply chain trend in the inventory phase, the company was affected by this fluctuation in demand, and the total revenue of emerging applications decreased by 120 million yuan year-on-year in 23. Looking at the breakdown, revenue in the fields of photovoltaic lithium-ion semiconductor/smart car/medical/robotics/factory automation was +22%/+35%/-20%/-14%/-3%, respectively, compared to the same period last year.
The hollow cup motor has leading performance, and humanoid robots are expected to open up room for growth. The company's hollow cup motor performance is close to Maxon and Faulhaber's two major overseas hollow cup motor leaders. At the same time, it has built strong hollow cup motor module R&D and manufacturing capabilities with controllers produced by Swiss subsidiary T Motion and motion control technology and sales networks of American subsidiaries AMP and Lin. If the company succeeds in expanding its humanoid robot business, robot startup is expected to bring high performance flexibility.
Profit forecast and investment rating: Considering that the recovery in domestic and foreign motor demand in the first half of the year fell short of expectations, we lowered the company's net profit to mother of 185 million yuan (-45 million yuan) and 236 million yuan (-108 million yuan). The net profit for 26 years is expected to be 300 million yuan, +31%/+28%/+29% year-on-year, and corresponding PE is 128/100/78 times, respectively. Considering that the company's humanoid robot applications are expected to expand in the medium to long term, it maintains a “buy” rating.
Risk warning: The macroeconomic downturn at home and abroad, increased competition, and the development of new robotics businesses falls short of expectations, etc.