Description of the event

The company's revenue for the first three quarters was 0.381 billion yuan, up 30.32% year over year. Net profit to mother was 0.072 billion yuan, up 11.53% year over year.

After deducting non-net profit of 0.057 billion yuan, the year-on-year increase was 26.34%.

Looking at a single quarter, Q3 revenue was 0.126 billion yuan, +37.35% year over year; net profit to mother was 0.024 billion yuan, +38.49% year over year; after deducting non-net profit of 0.018 billion yuan, +29.91% year over year.

Incident comments

Performance continues to increase, and new orders have maintained a strong momentum. The company's orders from January to September '24 were +37%, of which: 1) The five-axis CNC machine tool business accounted for about 63%, of which the five-axis vertical machining center accounted for about 58% of the order amount, the five-axis horizontal milling machine accounted for about 23% of the order amount, the five-axis horizontal machining center accounted for about 15% of the order amount, the high-speed blade grinding center accounted for about 3%, and the order amount for other products accounted for about 1%. The average order price for five-axis CNC machine tools is 2.23 million yuan/unit (excluding tax): 2) production line business accounts for about 32%; 3) functional parts business accounts for about 2%, with orders growing at a year-on-year rate of about 30%, of which motor orders account for about 46%, turntable orders account for about 34%, and other businesses such as electric spindles account for about 20%; 4) Other businesses account for about 2%.

Aerospace has a stable position and is actively expanding multiple industries. Of the new domestic orders in the first three quarters of 24, aerospace accounted for 58%, universities and research institutes accounted for 11%, automobiles accounted for 7%, machinery and equipment accounted for 10%, the energy sector accounted for 8%, and weapons, ships, and tools together accounted for 6%. Judging from the growth rate, new orders in the aviation sector increased by about 10% year-on-year. With the continuous mass production of large aircraft and other aviation industries, demand for high-end CNC machine tools is expected to continue to increase. The energy sector grew at a year-on-year rate of about 21%. The automotive sector is a civilian sector that the company continues to focus on and focus on, and new orders are growing at a rate of about 26% year-on-year. Furthermore, in the fields of weapons, ships, scientific research, etc., the company continues to export high-precision five-axis CNC machine tool products to help the high-quality development of China's high-end equipment manufacturing industry.

Production capacity expansion is progressing in an orderly manner, and scale effects are expected to continue to show. Driven by revenue growth, the company's expense ratio decreased by 6.9 pct year on year during the Q3 period, net margin was +0.22 pct year on year, and gross margin decline of 4.12 pct is expected to be mainly due to the impact of product structure, and the share of automated production line business with low gross margin increased. Looking back, the implementation of the company's fixed fund-raising projects will help further optimize the production capacity layout, expand the market share of leading products, and increase the revenue scale and profit level. Currently, production expansion in the Dalian plant is progressing steadily. Construction of the Ningxia Kode (Yinchuan project implementer) and Shenyang Kode (Shenyang project implementer) has started construction one after another. The Ningxia Kode project is expected to be partially put into use in June 2025; Shenyang Kode began construction in September this year, and it is expected that part of it will be put into use in the second half of 2025.

The company announced the first equity incentives after listing to bind core talents. According to the incentive plan, the incentive target accounts for about 9.21% of the total number of employees, and the granting of rights accounts for about 0.87% of the total share capital. The incentive plan mainly grants the company's directors, executives, core technicians and key personnel, and is expected to be highly tied to core talents and solidify the foundation for the long-term development of the enterprise.

Maintain a “buy” rating. The company is one of the few complete machine tool companies in China with a complete industrial chain. Currently, the company continues to promote production capacity construction and implementation, and the superimposed integrated layout is expected to open up room for growth. The company is expected to achieve net profit of 0.12 billion, 0.181 billion, and 0.258 billion in 2024-2026, corresponding PE of 60x, 40x, and 28x, respectively.

Risk warning

1. The downstream application penetration of five-axis machine tools falls short of expectations;

2. The company's five-axis machine tools fell short of expectations in the fields of aerospace, military, and new energy vehicles.