Description of the event
The company disclosed its 2024 semi-annual report: during the reporting period, the company 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, an increase of 203.42% year-on-year losses; net profit without return to mother was -0.136 billion yuan, an increase of 36.12% year-on-year losses. The results fell short of previous expectations.
Incident reviews
The 2024H1 performance was under pressure, mainly due to the impact of the revenue delivery cycle of the overseas smart production line business. Single Q2 revenue increased sharply month-on-month, and net losses after deducting non-net losses narrowed significantly month-on-month. In order to actively adapt to market changes, the company vigorously explores overseas business markets for intelligent production lines and strives to obtain market orders. Due to the characteristics of high unit prices, complicated installation and commissioning, and long delivery cycles, the company's semi-annual performance is under pressure. Judging from the single-quarter performance, the company achieved revenue 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 -0.038 billion yuan, which changed from profit to loss; loss narrowed 44.94% month-on-month; net profit after deduction was 0.055 billion yuan, and loss narrowed 32.23% month-on-month. 2024Q2
During the reporting period, the company's gross sales margin increased by 4.43 pct year on year, and the gross margin of CNC systems and machine tools exceeded 40%, a record high; the decline in net interest rates was mainly affected by a sharp increase in the cost ratio during the period.
During the reporting period, the company's net sales margin was -20.39%, down 15.82 pct year on year; gross sales margin was 34.75%, up 4.43 pct year on year. Among them, benefiting from the high-end product structure, the gross margin of CNC systems increased 4.33 pcts to 40.79% year on year, a record high; the gross margin of robots and intelligent production lines was 22.01%, a decrease of 3.52 pct year on year. During the reporting period, the company's expense ratio increased by 18.59pct to 59.37% year-on-year.
Among them, the sales expense ratio was 15.90%, up 6.6 pct year on year; the management expense ratio was 14.40%, up 5.12 pct year on year; the financial expense ratio was 3.07%, an increase of 1.53 pct year on year, mainly due to an increase in medium- and long-term loans during the reporting period, leading to an increase of interest expenses; and the R&D expense ratio was 26.00%, an increase of 5.34 pct year on year.
During the reporting period, the company continued to give full play to its five-axis high-end leading advantage, and CNC system revenue achieved steady growth; the company actively implemented a global strategy and achieved another breakthrough in the overseas market for intelligent production lines. During the reporting period, the company's CNC systems and machine tool sector achieved revenue of 0.383 billion yuan, an increase of 3.89%; industrial robots and intelligent production lines achieved revenue of 0.204 billion yuan, a year-on-year decrease of 57.82%, mainly affected by ongoing orders related to the new energy power battery intelligent equipment business; NEV support achieved revenue of 14.7333 million yuan, an increase of 31.60% year on year; special equipment achieved revenue of 21.6615 million yuan, up 14.97 percent year on year %. In the field of high-end CNC machine tools, the company launched the “5-axis flagship product package” during the CCMT2024 Shanghai exhibition, making the 5-axis processing accuracy and processing efficiency comparable to the international advanced level; it cooperated with machine tool companies such as Shandong Haomai, Dongguan EVM, and Huagong Laser to jointly develop various types of 5-axis machine tools to provide batch support for enterprises in key fields of automobiles, parts, laser processing and high-end. During the reporting period, Huashu Jinming stepped up its overseas market expansion efforts and signed contracts with a total amount of 0.5 billion yuan for the British and Japanese projects. The first soft pack battery module line for the French export project was successfully packed and shipped from the factory to France.
Investment advice
The company's high-end CNC system is in a leading position in China. During the reporting period, the gross margin of the CNC system reached a record high, and the product structure was further optimized to the middle and high-end. The domestic replacement market space is broad in the future, and the company is expected to maintain a high level of growth and profitability. As of the end of 2024Q2, the company's contract debt was 0.339 billion yuan, an increase of 55.43% year over year, and an increase of 77.49% over the end of 2023Q4, reflecting that the company has sufficient orders in hand and its ability to obtain orders continues to improve. Although 2024H1's revenue is under downward pressure, considering the company's abundant orders and the successful delivery of intelligent production line overseas projects to confirm revenue, the previous results are expected to be realized. In summary, we expect the company's net profit to be 0.075 billion yuan, 0.135 billion yuan, and 0.157 billion yuan respectively, with year-on-year increases of 178.7%, 78.9%, and 16.3%, and EPS of 0.4 yuan, 0.7 yuan, and 0.8 yuan respectively. According to the closing price of 20.27 yuan on September 4, PE is 53, 30, and 26 times, respectively, maintaining a “buy-A” investment rating.
Risk warning
Macroeconomic fluctuations and industry fluctuation risks; industry competition risks; technology research and development risks; risk of increasing raw material procurement costs; risk of non-recurring profit and loss accounting for a high proportion of the company's net profit, etc.