Key points of investment
Downstream demand in the industrial robot industry is slowing down, and the company's short-term performance is under pressure. In 2023, the company achieved revenue of 356 million yuan, down 20.1% year on year; net profit to mother was 84 million yuan, down 45.8% year on year; net profit without return to mother was 75 million yuan, down 41.5% year on year. By business, harmonic reducer and metal parts business revenue was 317 million yuan, -23.8% year on year, harmonic reducer sales volume was 211,000 units, -17.8% year over year; mechatronic products business revenue was 33.555 million yuan, +30.8% year over year; intelligent automation equipment business revenue was 2.341 million yuan, +1891.9% year on year. There has been a certain decline in the company's performance. The main reason is that demand for the company's products in the downstream 3C and semiconductor industries is sluggish, and fixed asset investment is slowing down, putting pressure on the company's demand for downstream industrial robots.
Looking at the quarterly split, 2023Q3 achieved revenue of 102 million yuan in a single quarter, up 0.86% year on year, +23.9% 1; net profit to mother was 12 million yuan, down 57.31% year on year, down 46.68% month on month. 2023Q3's revenue improved month-on-month, mainly due to a recovery in the downstream 3C industry.
2024Q1 achieved revenue of 82 million yuan, a year-on-year decrease of 7.45%; net profit to mother was 20 million yuan, a year-on-year decrease of 18.39%; net profit after deducting non-return to mother was 0.16 million yuan, a year-on-year decrease of 25.58%.
Increased industry competition & low capacity utilization hamper profitability
The company's gross sales margin in 2023 was 41.1%, -7.6pct year on year, mainly due to slowing industry demand and increased competition. By business, the gross profit margin of the harmonic reducer and metal parts business was 41.17%, -7.6pct; the gross profit margin of the mechatronic products business was 41.03%, -1.35pct year on year; the intelligent automation equipment business is small and has not yet achieved profit. The company's net sales margin in 2023 was 23.8%, -11.3pct year on year, mainly due to a decline in gross sales margin and an increase in the cost ratio for the period. The company's expense ratio for the 2023 period was 16.3%, +4.2pct; of these, sales/management/R&D/finance expenses were 3.1%/6.2%/13.6%/-6.5%, respectively, and +1.7/+0.9/+3.3/-1.8pct, respectively. The increase in sales expenses is mainly due to an increase in sales and exhibition expenses; the decrease in the financial expenses ratio is mainly due to an increase in monetary interest income.
2024Q1's gross sales margin was 42.6%, -1.8 pct year on year; net sales margin was 25.3%, -2.4 pct year on year.
The cost rate for the 2024Q1 period was 22.2%, +7.5 pct year on year. Among them, the sales/management/R&D/finance expenses ratio was +0.9/+1.9/+3.1 pct year over year, respectively. Although the company's profitability declined year-on-year in 2024Q1, it improved month-on-month in 2023Q4. We believe that as downstream demand recovers and capacity utilization increases, the company's profitability is expected to begin to recover.
Humanoid robots open up long-term growth space, and mechatronic products increase market development efforts (1) Harmonic reducers: small load, high accuracy, and compact structure. They are mainly used in humanoid robots for rotating joints such as small arms, big arms, and hips. They are currently the best solution for humanoid robots. As the leading domestic harmonic reducer, the company is expected to fully benefit from the volume of humanoid robots.
(2) Mechatronic products: As industrial production develops in the direction of high precision, human-robot collaboration, and mobility flexibility, mechatronic integration is also being developed more and more widely in the technical route in the field of precision transmission devices as an industrial technology that can meet the above development trends. The company's mechatronic products and micro electrohydraulic servo products have gradually entered the market. At the same time, the company applied this new technology to the company's new products, such as high-end precision CNC turntables, hydraulic grinding heads, adaptive mobile special equipment, and high-end CNC machine tools. As the scale of the new products expands, it will help consolidate the company's leading position in the industry.
Profit forecast and investment rating: Considering the impact of gradual downstream recovery and smooth end customer expansion, we lowered the company's net profit to the mother for 2024-2025 to 1.10 (original value 1.72) /1.53 billion yuan (original value 2.68) million yuan, respectively, and gave a net profit forecast of 212 million yuan for 2026. The current stock price corresponds to dynamic PE of 182/131/95 times, respectively. Considering the company's growth in the humanoid robot field, we still maintain an “increase in holdings” rating.
Risk warning: Industry competition intensifies, customer breakthroughs fall short of expectations, and new product development falls short of expectations.