Revenue declined year-on-year, and the decline in revenue from industrial robots and intelligent production lines dragged down total revenue
2024H1 achieved operating income of 0.629 billion yuan, a year-on-year net profit of -29.02%, a year-on-year increase in loss margin (2023H1 net profit of -0.035 billion yuan), and realized net profit without deduction of 0.136 billion yuan. The year-on-year loss expansion was less than net profit due to mother (2023H1 net profit without return to mother was -0.1 billion yuan). By product: the 2024H1 CNC system and machine tool sector achieved revenue of 0.383 billion yuan, +3.89%; the industrial robot and intelligent production line sector achieved revenue of 0.204 billion yuan, or -57.82%; the NEV supporting business sector achieved revenue of 0.015 billion yuan, +31.60% year over year; and the special equipment sector achieved revenue of 0.022 billion yuan, +14.97% year over year. Revenue in the field of 2024H1 industrial robots and intelligent production lines dropped significantly. The main reason was that orders in the NEV power battery intelligent equipment business had not yet generated revenue, which led to a year-on-year decline in total revenue. Net profit from 2024H1 continued to lose money, mainly due to the company maintaining high investment in R&D.
Looking at a single quarter, 2024Q2 achieved operating income of 0.386 billion yuan, a year-on-year net profit of -0.038 billion yuan, a year-on-year loss conversion, and realized net profit deducted from non-mother of -0.055 billion yuan. The year-on-year loss margin increased slightly (2023Q2 net profit after deducting non-return to mother was -0.042 billion yuan). In the context of the 2024Q2 revenue decline, the company's R&D expenses are still high, putting pressure on net profit to mother.
The gross margin has increased, and the loss margin has increased due to the increase in the period expense ratio
The gross margin of the 2024H1 company was 34.75%, +4.43pct year on year, and the net sales margin was -20.39%, -15.82pct year on year. Among the businesses that account for a high proportion of revenue: the gross margin of the CNC system and machine tool business was 40.79%, +4.33pct year on year, and the gross margin of the robot and intelligent production line business was 22.01%, -3.52 pct year on year. The 2024H1 period cost rate was 59.37%, +18.59pct, of which the sales/management/finance/R&D expenses ratio was 15.90%/14.40%/3.06%/26.00%, +6.60pct/+5.12pct/+1.53pct/+5.34pct year-on-year.
The 2024H1 sales expense ratio has increased significantly. The main reason is that the downstream machine tool boom has not recovered, and the company's sales and market development expenses have increased. Furthermore, the company's R&D expenses have remained high, and it is committed to breaking through the “stuck neck” problem in the field of CNC systems. The combination of revenue pressure and high cost rates has led to an increase in the company's losses.
The net cash flow from 2024H1's operating activities was -0.082 billion yuan, which changed from positive to negative over the previous year (2023H1 was 0.06 billion yuan), mainly due to the 2023H1 subsidiary receiving large amounts of national project support funds.
Companies with high contract liabilities have sufficient orders in hand. The high increase in products in inventory is expected to be realized in the future. The company's contract debt was 0.339 billion yuan, +55.43% over the same period last year. The large increase in contract debt shows that the company has sufficient orders in hand. As of the end of 2024H1, the products in the company's inventory were 0.19 billion yuan, compared to +136.00%. We judge that the NEV power battery intelligent equipment business accounts for a relatively large share of products, which confirms that the company is fulfilling many orders, and it is expected that revenue will gradually be realized in the future.
R&D investment is gradually realized, and production expansion is fixed to inject development vitality
1) Tackle the “stuck neck” problem of CNC systems, and R&D investment is gradually realized: the company continues to increase R&D investment, attack the “stuck neck” field of CNC systems, and promote the localization of CNC systems. During the reporting period, the company obtained 78 authorized patents and 37 computer software copyrights, and R&D investment continued to be realized.
2) Increase production capacity to inject vitality into medium- to long-term development: On March 14, 2023, the company announced that it plans to raise 1 billion yuan of supporting capital, mainly for industrial robot technology upgrades and industrialization base construction projects and key technology research and industrialization projects for five-axis CNC systems and servo motors. Along with the continuous release of fixed construction capacity, it will inject medium- to long-term development impetus into the company.
Profit forecast and investment rating: Considering the short-term pressure on the company's revenue, we lowered the company's 2024-2026 net profit forecast to 0.89 (original value 1.08) /1.34 (original value 1.58) /1.83 (original value 2.24) billion yuan. The current stock price corresponds to dynamic PE 46/31/22 times, respectively. Considering that the company is a scarce asset in the high-end CNC system field, we maintained the company's “gain” rating.
Risk warning: The recovery of the machine tool industry falls short of expectations, R&D falls short of expectations, and market competition increases risks.