Revenue in 2023 increased 17.96% year over year, and net profit to mother increased 34.24% year over year. The company achieved revenue of 3.852 billion yuan in 2023, up 17.96% year on year; net profit to mother was 865 million yuan, up 34.24% year on year. The gross margin/net margin for 2023 was 40.32%/22.51%, a year-on-year change of +4.55/+2.72 pcts. The company's performance has been growing steadily, and its profitability continues to improve, mainly due to: 1) the increase in the share of high-margin vacuum pump business; 2) the cost of raw materials is low. The company's sales/management/R&D/finance expense ratio in 2023 was 5.17%/3.68%/5.53%/0.04%, with a year-on-year change of +0.41/-0.35/+0.27/+1.37 pcts. Financial expenses were mainly due to an increase in exchange losses compared to the same period last year. 2024Q1's revenue was 749 million yuan, up 8.61% year on year; net profit to mother was 146 million yuan, up 25.64% year on year, gross margin/net margin was 37.08%/19.58% respectively, with a year-on-year change of +0.23/+2.63 pcts. The faster profit growth rate was mainly due to a large increase in exchange earnings in the first quarter.
The increase in the share of vacuum pump business has led to a continuous increase in the company's profitability. By business, the revenue of compressor/vacuum products in 2023 was 1,947/1,642 billion yuan, a year-on-year change of +12.04%/+28.67%, gross margin of 34.31%/47.89%, respectively, and a year-on-year change of +2.88/+5.28 pcts. The growth in the compressor business is mainly due to 1) the recovery of the central air conditioning market in 2023; 2) the market demand in the refrigeration and refrigeration industry continues to grow.
The rapid growth of the company's vacuum pump products is mainly due to the continuous expansion of the photovoltaic industry in the short term, driving the rapid growth of the company's photovoltaic vacuum pumps. Furthermore, the company's semiconductor vacuum pumps have continued to make breakthroughs. Vacuum pumps with strict manufacturing processes have been approved by some 8-inch and 12-inch semiconductor chip foundries, packaging and testing plants, and semiconductor equipment manufacturers, and mass delivery has begun, which is expected to further open up room for the company's growth in the future.
The development of refrigeration has driven the growth of refrigeration compressors, and the release of oil-free products has improved the profitability of air compressors. The company is in a leading position in the field of screw compressors in China, and the overall business is developing steadily. In the refrigeration compressor business, refrigeration compressors benefit from the rapid development of e-commerce and the prepared food industry, and terminal consumer demand gradually opened up, showing a rapid growth trend. The company's refrigeration and refrigeration compressors maintained rapid growth in 2023, and are the fastest growing segment of refrigeration compressors. In terms of air compressors, the company continues to expand into the high-end compressor market, and has successively launched maglev centrifugal compressors and oil-free air compressors. Currently, the company's oil-free air compressor products are gradually being released, driving the growth of the company's air compression products and the continuous improvement of the profitability of the air compressor business.
Risk warning: economic recovery falls short of expectations; vacuum pump business expansion falls short of expectations; raw material prices fluctuate.
Investment suggestion: The company is a leading domestic screw compressor and vacuum pump company. Considering the slowing of production capacity expansion in the photovoltaic industry, we lowered the 2024-2025 profit forecast and added the 2026 profit forecast. The estimated net profit for 2024-2026 is 925/10.30/1,209 million yuan (the original value for 2024-2025 was 1,08/1,193 billion yuan), corresponding to PE 12/11/9 times, maintaining a “buy” rating.