1H24 results are in line with our expectations
The company released its 2024 semi-annual report: 1H24 revenue of 0.816 billion yuan (YoY +45.80%), net profit of 0.2 billion yuan (YoY +35.45%); in a single quarter, 2Q24 revenue 0.447 billion yuan (YoY +61.71%), net profit to mother 0.114 billion yuan (YoY +35.83%). The 1H24 revenue growth rate exceeded the forecast limit and was in line with our expectations.
1H24 equipment revenue increased 63.53% year over year. In the first half of 2024, the company's equipment/ink revenue increased by 63.53%/19.62% year-on-year to 0.53/0.237 billion yuan, respectively. 1) Equipment side: Benefiting from the large-scale introduction of digital inkjet printing technology, the company's digital inkjet printing equipment business continued to expand, with 1H24 revenue of 0.47 billion yuan, +44.82% over the same period. We expect direct injection equipment revenue share to increase further in 2024, and SinglePass is expected to accelerate introduction; in addition, the company's merger and acquisition of Texpa led automated sewing equipment to achieve revenue of 60.67 million yuan in the first half of the year; 2) Ink side: As the company's digital printing equipment market holdings increase and the ink unit price reduction trend The sales scale of consumable parts such as ink continues to grow.
2Q24 profitability increased month-on-month. 1) 1H24 gross profit margin 45.84%, year-on-year -1.68ppt, and gross margin of digital inkjet printing/ink/automated sewing equipment was 46.05%/50.57%/27.17%, respectively. We believe that the decline in the company's gross margin was mainly due to the relatively low gross margin of automated sewing equipment. According to the company announcement, orders for 1H24 domestic automatic bed sheets, duvet machines, etc. increased significantly year-on-year. We believe that with large-scale manufacturing or further cost reduction and efficiency; 2) 2Q24 gross profit margin 46.01%, y-1.47ppt, month-on-month + 0.38ppt; Sales/management/R&D/finance expense ratios were 6.62%/5.25%/5.73%/-1.07%, respectively, -2.67/-1.07/-0.56/+11.12ppt. The change in financial expenses was mainly due to higher exchange gains in the same period of the previous year due to the increase in the US dollar exchange rate; 2Q24 net interest rate 25.40%, year-on-year -4.84ppt, and 2Q24 profit margin increased marginally.
Development trends
We are optimistic about the growth space brought about by core technology research and capacity expansion. 1) The company invested 49.39 million yuan in R&D in the first half of 2024, compared with +27.62%. A total of 12 new domestic invention patents and utility model patents were applied for. The 2024 plan focuses on “development of core components and equipment for digital micro spraying”; 2) The company's “intelligent factory with an annual output of 2,000 sets of industrial digital printing equipment and consumables” has been officially put into operation, and 1H24 has achieved benefits of about 59.95 million yuan; the plant infrastructure work for the “Intelligent Production Line with an annual output of 3,520 sets of industrial digital printing equipment” project has already been completed Completed; the ink production site is also being expanded.
Profit forecasting and valuation
We keep our 2024/2025 profit forecast unchanged, and the current stock price corresponds to 23.3x/16.2x P/E 2024/2025. Maintaining the outperforming industry rating, considering the recent correction in the textile machinery industry's valuation, the target price was lowered by 11% to 73.13 yuan (after exclusion), corresponding to 2024/2025 30.0x/20.9x P/E, with a current increase of 29%.
risks
The recovery in industry demand fell short of expectations, new business development fell short of expectations, and competition intensified risks.