Brief performance review

On October 29, the company released its quarterly report for the year 24:

24Q1-Q3 achieved revenue of 0.919 billion yuan, +14.03% year over year; net profit to mother was 0.191 billion yuan, -10.74% year over year; gross sales margin was 43.32%, -0.34PCT year on year; and net sales margin was 23.68%, -4.87PCT year on year.

24Q3 achieved revenue of 0.363 billion yuan, +21.87% year over year; net profit to mother was 0.074 billion yuan, +0.38% year over year; gross sales margin was 43.17%, -2.25PCT year on year, -0.32PCT month on month; net sales margin was 23.88%, -3.26PCT year on year and -2.29PCT month on month.

Management analysis

1. Performance is in line with expectations. The split is as follows:

1) Revenue splitting: Mergers and acquisitions of companies are progressing smoothly, and revenue growth has broken through traditional main business limits.

According to public information, the subsidiary includes sensor digital signal chips, water quality sensors, robots, temperature sensors, etc. It is estimated that the revenue growth for this period will mainly come from Huahong Technology, Peach Automation, Rubide, Suzhou Yushan, etc.

2) Gross profit margin: 24Q3 gross margin is under month-on-month pressure. The overall gross margin level of subsidiaries is expected to be slightly lower than that of parent companies, mainly due to mergers and acquisitions.

3) Expense rate: Multiple cost rate increases are due to higher expense rates for mergers and acquisitions subsidiaries.

Sales/ Management/ Financial/ R&D Expense Rates for 24Q3

6.33%/7.1%/1.7%/8.26%, year-on-year +1.07PCT/-0.21PCT/+0.53PCT/+0.87PCT, +0.92PCT/+0.74PCT/+0.33PCT month-on-month.

4) Other: Net loss of 8.09 million yuan due to changes in fair value, -2.82% year-on-year. It is estimated mainly due to lower current financial management earnings than the same period last year. Due to the addition of reporting subsidiaries, the company's monetary capital and goodwill were +70% and +108%, respectively, compared to the end of 2023.

2. Follow-up outlook: It is expected that the newly acquired company will continue to enrich the sensor forest system and increase the company's deduction of non-profits. The company's six-dimensional torque sensor has been sent to many domestic robot customers, which is expected to open up room for growth in the long term.

Profit Forecasts, Valuations, and Ratings

The company's Sensor Forest progressed smoothly from 1 to N, and the company acquired a number of high-quality sensor companies, which is expected to achieve good synergy effects in the fields of industrial automation and humanoid robots.

We maintain our performance forecast. We expect revenue of 1.271/1.481/1.695 billion yuan for 24-26, +18.5%/+16.59%/+14.45%, respectively; net profit of 0.334/0.389/0.442 billion yuan, respectively, or +6.92%/+16.33%/+13.63% year-on-year, maintaining an “gain” rating.

Risk warning

Raw material price fluctuations, investment mergers and acquisitions risks, goodwill impairment risks, and technology path risks.