Incident: The company released the first quarter report of 2023. During the reporting period, the company achieved revenue of 129 million yuan, +0.32% year on year, and achieved net profit of 11 million yuan to the mother, -5.24% year on year, after deducting non-net profit of 11 million yuan, -2.32% year on year, gross profit margin of 41.98%, and +3.42 pcts year on year.
The overall performance was stable, and the gross profit trend was positive: the company's overall performance in 2023Q1 was stable, and revenue was basically the same as the same period last year. There was a certain increase in gross margin compared to the same period last year, but the overall expense ratio increased compared to the same period last year. We speculate that bonus payments and new product development led to an increase in related expenses, and the final profit level fell slightly year-on-year. Looking ahead, the company's gross margin trend is improving, downstream semiconductors, new energy and other fields are developing smoothly. The company has strong barriers in the field of vacuum electronic devices, and is expected to enter a period of rapid growth.
Downstream development has been smooth, and many fields have helped growth:
1) Semiconductor components: The company has been deeply involved in vacuum capacitors for several years to achieve breakthroughs. The performance parameters are comparable to foreign manufacturers and the cost is low. It has established cooperative relationships with ADTEC, Beifang Huachuang, and ChinaMicro. Currently, the global share is low, and it is expected to help domestic substitution and achieve rapid growth in the future.
2) New energy vehicles: Under the trend of high voltage fast charging, main circuit contactor vacuuming is the general trend. The company has successfully introduced leading downstream customers through decades of technology accumulation, and cooperation with Tesla is also progressing. The company has plenty of current and intended orders, and production capacity is the main bottleneck. With the implementation of 6.48 million DC contactor projects for convertible bonds in the future, it is expected to help the rapid release of performance.
3) Wind storage: Under the high voltage and high power trend, the direct AC side all brings demand for vacuum contactors. The company has successively supplied inverter customers such as Sunshine Power, TBEA, Xinfengguang, and Xinnengan, and more major customers are also being developed. In the future, the convertible bond project will add 1.65 million units of annual production capacity, which will strongly support order fulfillment.
Investment advice: The company's downstream development is smooth and production capacity is gradually being released. We expect the company's performance to grow rapidly. We expect the company's net profit to be 1.31/251/376 million yuan for 23/24/25, EPS to be 1.37/2.63/3.94 yuan/share, and the corresponding PE to be 45.67/23.80/15.85 times, maintaining the “increase in holdings” rating.
Risk warning: risk of falling demand for new energy vehicles; adverse risk of downstream application expansion; risk of trade friction; risk of improper product quality control; risk of fluctuations in raw material prices.