Incident: The company released its 2024 quarterly report. During the reporting period, the company achieved operating income of 206 million yuan, +54.72% year over year; realized net profit due to mother of 0.1 million yuan, +104.72% year over year, turning loss into profit; realized net profit without return to mother of -14 million yuan, +56.72% year on year, narrowing losses.
Performance increased dramatically, and profit margins declined due to changes in product structure. 2024Q1's revenue was +54.72% year-on-year, and net profit to mother was +104.72% year-on-year, a significant increase over the same period last year. This was mainly due to the expansion of the company's business scale and expansion of market applications, which led to an increase in revenue and net profit for customized 3D printing products, self-developed equipment and raw materials. The company's 2024Q1 gross profit margin was 41.25%, year-on-year -7.37pct, and -11.16pct month-on-month. This is mainly due to changes in the types of products sold by the company, the relatively simple structure of some products, and the decline in price levels due to an increase in sales scale. In the future, with the large-scale cost advantage brought about by increased production capacity, gross margin is expected to recover.
Steady increases will be implemented to promote the construction of production capacity, and the advantages of industrial chain integration are expected to be further consolidated. In December 2023, the company successfully completed its fixed increase. The actual net capital raised was 3.07 billion yuan. It is expected to add 800 tons of 3D printing raw materials and 1.6 million hours of printing time for customized 3D printing products after delivery. Looking at specific projects: 1) In March 2024, the company started construction of Phase III projects C and D, and construction of all plots of the Company's Phase III project has started; 2) In April 2024, construction of the Company's Phase IV project E site was held, marking that the construction of the Phase IV project is about to enter the pre-delivery stage. After the completion of the company's project, it is expected to effectively mitigate the company's insufficient production capacity, greatly enhance the company's self-supply capacity for upstream raw materials, seize the “emerging opportunity period” for industry development, and further establish and consolidate the advantages of the company's entire industry chain.
Downstream applications can be expected to continue to expand, and we are optimistic that 3D printing will accelerate its penetration into the 3C field. On the one hand, the company continues to deepen close partnerships with aerospace companies. In 2023, the company's revenue from the aerospace sector reached 690 million yuan, accounting for 56.02% of total revenue; on the other hand, the company continued to expand the market in other downstream application fields, and achieved application and mass production and sales in various fields such as mold manufacturing, medical research, automobile manufacturing, energy and power, rail transit, shipbuilding, and electronics industry. We believe that there are plenty of downstream application scenarios for 3D printing, and the blue ocean market has yet to be discovered. As 3C giants such as Honor, Apple, and Xiaomi use 3D printed titanium alloy structural parts in their new products, iterate on superposition technology and reduce costs, the application of 3D printing in the 3C industry has broad market space and is expected to bring about a new performance growth curve.
Actively lay out overseas business and continue to develop overseas partners. In 2023, the company's overseas business revenue was 51 million yuan, +118.45% year-on-year. The company actively developed overseas partners and achieved a series of breakthroughs in 2024Q1:1) signed an agency agreement with Korea's Lincsolution to jointly explore the Korean market; 2) signed an agency agreement with Poland's CADxpert to jointly explore markets in Poland and the Baltic Sea; 3) signed an agency agreement with Nigeria's Russell Smith to jointly explore markets in West Africa, Namibia, Angola and Uganda. In the future, the company will further strengthen the promotion of products and solutions in overseas markets, which is expected to contribute to new growth in performance.
Investment advice: As a leading provider of complete solutions for metal additive technology in China, the company is one of the few domestic enterprises that have built a complete 3D printing industry chain with raw materials, equipment, customized products and technical services, and has strong brand and customer advantages. In the future, with the expansion of downstream applications, the release of the company's production capacity, and the prominent advantages of industrial chain integration, the company's performance is expected to continue to grow rapidly. We expect the company's revenue in 2024-2026 to be 1,798/25.33/3.498 billion yuan, up 45.88%/40.90%/38.10% year-on-year; net profit to mother is 3.11/5.01/702 million yuan, with year-on-year growth rates of 119.62%/61.04%/40.18%, EPS 1.14/1.84/ respectively 2.58 yuan, corresponding PE is 52/33/23 times, giving a “gain” rating for the first coverage.
Risk warning: macroeconomic downside risk; industry competition increases risk; risk of downstream market expansion falling short of expectations; risk of project construction falling short of expectations; risk of technology route iteration.