Incidents:
The company released its 2024 semi-annual report. The first half of 2024 achieved operating income of 0.629 billion yuan, a year-on-year decrease of 29.02%; net profit to mother was 0.107 billion yuan, and the performance was slightly lower than expected. In the 2024Q2 quarter, the company achieved operating income of 0.386 billion yuan, a year-on-year decrease of 27.03% and a month-on-month increase of 58.54%; net profit to mother was 37.8282 million yuan.
Comment:
CNC system revenue has increased slightly, and we are optimistic that subsequent policy support and downstream transformation and upgrading will bring new opportunities. According to the company's semi-annual report, in the first half of 2024, the company 1) CNC systems and machine tools (including CNC systems, motors, and CNC machine tool businesses) achieved revenue of 0.383 billion yuan, up 3.89% year on year, accounting for 60.93% of total revenue; 2) Affected by ongoing orders related to the new energy power battery intelligent equipment business, robots and intelligent production lines achieved revenue of 0.204 billion yuan, a year-on-year decrease of 57.82%, accounting for 32.46% of total revenue; 3) NEV supporting business achieved revenue of 0.015 billion yuan, up 31.60% year on year; 4) The special equipment sector achieved revenue of 0.022 billion yuan, an increase of 14.97% year on year.
The pace of revenue confirmation for intelligent production lines is dragging down performance, and the company's profitability is under pressure in the short term. According to the company's semi-annual report, 2024H1's gross profit margin was 34.75%, +4.43pcts year on year; net profit margin was -20.39%, -15.82pcts year on year. Among them, the gross profit margin of the CNC system and machine tool business was 40.79%, +4.33 pcts year on year; the gross profit margin of robot and intelligent production line was 22.01%, -3.52 pcts year on year. Single 2024Q2 gross profit margin was 34.74%, +4.97pcts year on year; net profit margin -12.12%, year-on-year -13.49pcts. In the first half of the year, in order to actively adapt to market changes, the company vigorously developed the overseas business market for intelligent production lines and made efforts to obtain market orders. Due to the characteristics of high unit prices, complicated installation and commissioning, and long delivery cycles, the company's profitability for half a year was under pressure. The 2024H1 sales/management/ R&D/ finance cost rates were 15.90%/14.40%/26.00%/3.06%, respectively, +6.60/+5.12/+5.34/+1.53pcts year-on-year, respectively. The increase in cost rates during the 2024H1 period was mainly due to the fact that orders related to the company's robots and intelligent production lines were still being executed, but the corresponding expenses had already been incurred and reflected on the reporting side.
The profit forecast was lowered and the “buy” rating was maintained. Considering the large order amount in the execution of robots and intelligent production lines, and the uncertainty of revenue recognition will affect the company's short-term profitability, we lowered our profit forecast. We expect the net profit to be 0.061/0.12/0.162 billion yuan for 2024-2026 (original net profit of 0.162/0.259 billion yuan for 2024-25), and the company's current stock price (2024/09/02) corresponds to the 2024/25/26 PE, respectively, according to Wind According to unanimous predictions, the PE of comparable companies in '24 was 86X, and the PE level of the company was lower than that of comparable companies. We are optimistic that the company's high-end systems will continue to be replaced by domestic production. Mid-range systems will use technical advantages to expand market share, support steady growth in revenue and performance, and maintain purchase ratings.
Risk warning: risk of industry demand falling short of expectations; risk of sharp fluctuations in product prices; risk of increased industry competition; risk of high customer concentration.