Description of the event
The company achieved operating income of 944 million yuan, or -17.27% year on year; realized net profit of 194 million yuan, or -40.37% year on year; realized net profit without deduction of 163 million yuan, or -45.41% year on year.
Looking at a single quarter, 2023Q4 achieved operating income of 98 million yuan, or -57.56% year on year; realized net profit to mother of -11 million yuan, turning losses year on year, and realized net profit without deduction of net profit not attributable to mother of -20 million yuan, which turned into a year-on-year loss. 24Q1: The company's revenue was 227 million yuan, -9.53%; net profit to mother was 57 million yuan, -12.67% year over year; net profit after deducting non-return to mother was 49 million yuan, -16.65% year over year.
Incident comments
The 23-year results are under pressure in the short term, waiting for downstream demand to be repaired. On the revenue side, in 2023, the company's revenue in the 3C and lithium battery sectors decreased by 9.34%/34.97%, respectively. Among them, the decline in revenue in the 3C sector was mainly due to insufficient demand for downstream customer production line updates and upgrades; the decline in revenue in the lithium battery sector was mainly due to the downstream lithium battery industry entering a stage of development focused on rising capacity utilization. Corresponding capital expenditure was reduced, and demand for new and updated equipment slowed down. On the profit side, the company's gross margin in 2023 was 64.23%, down 1.97pct year-on-year. On the cost side, the company's sales/management/ R&D expenses increased by 3.57/1.09/4.68 pct year-on-year in 2023, respectively. The pressure on performance was mainly due to a decline in revenue scale, a decline in gross margin, and an increase in expense ratios. The gross margin of the 24Q1 company was 66.82%, +0.55pct year on year, and profitability recovered.
Insist on R&D investment, and actively lay out and improve product lines through endogenous and epitaxial extension. Although the company's production and sales volume declined markedly in '23 due to downstream demand, production and sales increased markedly due to batch application of homemade cameras. Camera sales increased +208% year-on-year in '23.
At the same time, the company insisted on continuous investment in key fields. In 2023, R&D investment reached 202 million yuan, an increase of 5.88% over the previous year, maintaining a high position. Among them, a large amount of resources were invested in deep learning (industrial AI) technology to expand new product lines such as sensors. The 2023 fund-raising project “Headquarters Machine Vision Manufacturing Center Project” was put into operation in stages, increasing the company's production capacity and self-production capacity. On the one hand, the company continues to focus on expanding product lines such as sensors, barcode readers, and homemade cameras; on the other hand, it is also experimenting with epitaxial methods to absorb mature product lines to help future development. In the short term, depreciation and amortization pressure has increased, but the long-term dimension is expected to help the company consolidate its core competitiveness.
Machine vision is still a high growth track, and the growth rate is expected to pick up. According to GGII data, China's machine vision market in 2023 was 18.512 billion yuan (not including the scale of automated integrated equipment), an increase of 8.49% over the previous year. Among them, the 2D and 3D vision markets were approximately 161.50 billion yuan and 2.362 billion yuan respectively, up 6.09% and 28.35% year-on-year respectively. It is estimated that by 2028, China's machine vision market will exceed 39.5 billion yuan, of which the 2D vision market will exceed 31.5 billion yuan, and the 3D vision market will be close to 8 billion yuan. As downstream demand recovers and the company's core competitiveness is further strengthened, the company's product sales scale and market share are expected to continue to expand steadily.
Maintain a “buy” rating. The company is expected to achieve net profit of 2.7, 350, and 4.7 billion yuan in 2024-2026, corresponding PE of 32, 24, and 18 times, maintaining a “buy” rating.
Risk warning
1. The risk that downstream demand falls short of expectations;
2. The risk of increased competition in the industry.