Incident Overview
The company released its 2023 annual report and 2024 quarterly report.
Pressured by 3C & New Energy dual-track demand, the revenue side is under short-term pressure. In 2023, the company achieved operating revenue of 944 million yuan, -17.27% year over year, of which Q4 was 98 million yuan, or -57.56% year over year. By industry: 1) Consumer electronics:
In 2023, revenue was 580 million yuan, -9.34% year on year, accounting for 61.4% of revenue, -5.4 pct year on year, mainly due to low 3C downstream demand; 2) Lithium battery: Achieved revenue of 260 million yuan in 2023, or -34.97% year on year, accounting for about 27.5% of revenue, -7.5 pct year on year, mainly due to the slowdown in demand for new and updated equipment in the lithium battery industry.
2024Q1 achieved revenue of 227 million yuan, -9.53% year-on-year, and the decline narrowed markedly. Looking ahead to the full year of 2024, benefiting from the acceleration of domestic substitution and the company's continued expansion of client-side applications, the 3C industry is expected to return to rapid growth. Combined with the gradual increase in demand in semiconductor and photovoltaic industries, the company's revenue side is expected to return to rapid growth.
The high cost ratio suppresses profit-side performance and waits for profit levels to pick up in 2023, the company's net profit to mother and net profit after deducting non-return to mother was 1.94 million yuan and 163 million yuan respectively, or -40.37% and -45.41% compared with the same period, which is slightly lower than the performance report (208 million yuan and 177 million yuan). The net sales interest rate and net profit margin after deducting non-sales in 2023 were 20.52% and 17.22%, respectively. Compared with -7.95 and -8.87pct, the profit level declined markedly. 1) Margin side: Gross sales margin in 2023 was 64.23%, -1.97pct year on year. We determined that the main reason was the decline in revenue scale, and the share of personnel and fixed costs per unit output value increased; 2) Expense side: the cost ratio for the 2023 period was 45.22%, +9.77pct year over year, which clearly suppressed net interest rate performance, mainly due to the decline in revenue scale. Among them, sales, management, R&D, and finance expense ratios were +3.57, +1.09, +4.68, and +0.42pct, respectively.
2024Q1's net profit attributable to mother and net profit net income not attributable to mother were 0.57 million yuan and 49 million yuan, respectively, -12.67% and -16.65% year-on-year. 2024Q1's net sales margin and net profit margin after deducting non-sales were 25.27% and 21.57%, respectively, -0.91 and -1.85pct year-on-year, respectively. 2024Q1's gross sales margin and period expense ratio were 66.82% and 41.83%, respectively, compared with +0.55 and +2.82pct, respectively. It can be seen that the increase in the expense ratio is the main reason for suppressing net interest rates. Looking back, as the revenue side gradually picks up, there is plenty of room for the expense ratio to decline, which is expected to drive the company's net interest rate to gradually rise.
Machine vision is the Changpo Heavy Snow Circuit. I am optimistic about the company's long-term growth logic. According to GGII data, China's machine vision market size is 17.065 billion yuan in 2022, of which the machine vision market size for the 3C and lithium battery industries is 4.3 billion yuan and 2.1 billion yuan respectively. The company's revenue and profit volume is small, and there is more room for growth. The company has a complete hardware and software product line, and continues to accelerate the implementation of deep learning (industrial AI) technology in various industries. In 2023, the company cooperated closely with consumer electronics customers. By applying the company's deep learning (industrial AI) technology, it is possible to solve testing pain points that have been difficult to solve in the industry for a long time, and gradually enter the technical verification and testing stage. Furthermore, on the basis of consolidating competitiveness in the 3C and new energy industries, the company expanded its field of competence into the fields of automobiles, semiconductors, photovoltaics, etc., further opening up room for growth.
Investment advice
We expect the 2024-2026 revenue to be 11.60, 13.85, and 1,632 billion yuan, respectively, +23%, and +18%. The net profit for 2024-2026 will be 3.00, 3.99, and 507 million yuan, respectively, +55%, +33%, and +27%. EPS for 2024-2026 will be 2.45, 3.26, and 4.15 yuan, respectively. The 2024/5/6 stock price of 76.05 yuan corresponds to PE 31, 23 and 18 times, for the first time Coverage gives a “gain” rating.
Risk warning
The downstream economy has declined and industry competition has intensified. In January 2024, the company was issued a warning letter by the Guangdong Securities Regulatory Bureau because the disclosure information on the use of funds raised did not match the facts.