Incidents:
The company released its 2024 quarterly report and 2023 annual report. In the first quarter of 2024, the company achieved revenue of 142 million yuan, a year-on-year increase of 1.40%; net profit of 0.20 million yuan, a year-on-year decrease of 48.81%; net profit after deducting non-return of 0.17 million yuan, a year-on-year decrease of 55.22%; revenue of 692 million yuan, a year-on-year increase of 14.82%; net profit of 133 million yuan, a year-on-year decrease of 8.84%.
The profit side was under short-term pressure in the first quarter, and revenue growth in the smart measurement business was high:
The company's revenue side rose steadily in the first quarter. Foreign trade revenue increased 22% year on year, and domestic business revenue fell 5.22% year on year, mainly due to the year-on-year decline in healthcare business revenue, which fell 66.05% year on year; domestic smart measurement business such as ultrasonic gas meters increased 240.02% year on year; revenue from industrial and safety business, which mainly focuses on refrigerant leak monitoring sensors, increased 59.85% year on year; and revenue from the automotive electronics business, which mainly focuses on automotive comfort system sensors, increased 37.56% year on year.
The year-on-year decline on the profit side was mainly due to a decline in gross margin and a large year-on-month increase in the period expense ratio.
The gross profit margin for the first quarter was 41.74%, a year-on-year decrease of 4.67 pcts, mainly due to changes in product structure and a decline in production capacity in Jiashan Industrial Park. The sales expense rate/management expense rate/R&D expense ratio for the first quarter were 8.59%/8.15%/14.34%, respectively, up 1.73 pcts/3.54pcts/4.48pcts, respectively, and increased 0.32pcts/2.41pcts/2.45pcts, respectively. This was mainly due to factors such as the increase in R&D personnel and Jiashan Industrial Park personnel, equity incentive expenses in 2023, and depreciation, leasing, transformation, and increased fuel and power costs in the commissioning of Jiashan Industrial Park. We believe that with the batch delivery of orders and the gradual increase in new products in the second quarter, the company's performance is expected to be stable, moderate and positive.
Orders for the automotive electronics business continued to grow, and ultrasonic gas meters and modules were put into production:
The company's automotive electronics business revenue increased 36.72% year-on-year in 2023. The total fixed amount of new automotive comfort system supporting sensor projects exceeded 1.4 billion yuan. At the same time, it launched car seat ventilation fan products and entered the batch supply stage. High-temperature gas sensors continue to be replaced by domestic production, with sales of more than one million units of pre-installed oxygen sensors in 2023; all testing and verification work for the first nitrogen and oxygen sensor front installation project has been completed and is expected to be put on the market in batches in 2024; engine emission oxygen sensors suitable for motorcycles and ventilators have been developed and gradually entered the market. In terms of power battery thermal loss monitoring sensors, lithium battery thermal loss control solutions based on laser Raman technology have been approved and ordered by mainstream battery companies and research institutes; power battery thermal loss monitoring sensor projects will be mass-produced one after another. Revenue from the smart metering business increased by 114.98% year-on-year in 2023, mainly due to the commissioning and operation of Jiashan Industrial Park. As of 2023, the company had an annual production capacity of 1 million ultrasonic gas sensors and 1 million ultrasonic gas meters.
The Department of Healthcare and Industrial Safety is growing new momentum and deploying low-carbon thermal engineering:
The healthcare business is mainly based on ultrasonic oxygen sensors, and revenue continues to grow and expand into the medical device field; in the industrial safety business, the company continues to develop markets in the field of safety and environmental protection, achieving good growth in application scenarios such as cellar safety monitoring, life science instrument safety monitoring, and power safety monitoring. Continuous clean room monitoring systems are actively extended to panels, semiconductors and other industries. At the same time, in energy storage application scenarios, solutions for PACK level detection requirements have been approved by mainstream energy storage system integrators, and will gradually enter the market. The low-carbon thermal industry chain is strategically laid out. According to the company's announcement, the company invested 57.14% of Nopu Thermal Energy, a leading company in the domestic condensing heat exchanger industry, and 51% of the domestic gas control valve company Jingding Electric to accelerate the industrialization process of intelligent combustion systems for gas wall-mounted stoves and their core components.
Investment advice:
We expect the company's revenue from 2024 to 2026 to be 1.05 billion yuan, 1,320 million yuan and 1,762 billion yuan, respectively, and net profit to mother will be 208 million yuan, 286 million yuan, and 404 million yuan respectively, corresponding to PE 17 times, 13 times, and 9 times, respectively. As a domestic gas sensor leader, the company has core technical advantages. Taking into account macroeconomic recovery and the company's various new businesses entering the performance release period, the 2024 PE25X was given, corresponding to a target price of 74.25 yuan for 6 months. Maintain a “buy-A” investment rating.
Risk warning: Industry demand falls short of expectations; market competition intensifies; order conversion falls short of expectations; new customer expansion falls short of expectations.