Core views
In the first half of 2023, the company achieved steady revenue growth. Among them, the servo system business revenue was 246 million yuan, an increase of 35.13% over the previous year, which became the main increase in the company's revenue.
The company's profitability is under pressure in the short term, mainly due to product and downstream structural adjustments. At the same time, the cost ratio increased year-on-year due to the company's strong investment in R&D, expansion of marketing channels, and implementation of equity incentives.
Despite short-term pressure on profitability, as an industry-leading enterprise, the company continues to optimize mature products, vigorously develop high-end products, and actively promote model changes and system upgrades, which is expected to help various businesses grow rapidly in the future.
occurrences
In 2023H1, the company achieved revenue of 713 million yuan, an increase of 5.83% over the previous year; net profit of 75 million yuan, a year-on-year decrease of 32.97%; net profit after deducting non-return net profit of 65 million yuan, a year-on-year decrease of 41.18%. Among them, Q2 achieved revenue of 398 million yuan in a single quarter, an increase of 7.26% over the previous year; net profit of 40 million yuan, a year-on-year decrease of 30.43%; net profit after deducting non-return net profit of 32 million yuan, a year-on-year decrease of 42.46%.
Brief review
Revenue achieved steady growth. The servo system business contributed mainly by 2023H1. The company achieved steady revenue growth in the context of weak manufacturing prosperity, mainly due to: ① The servo system business achieved revenue of 246 million yuan, an increase of 35.13% over the previous year. This was the main increase in the company's revenue. The rapid growth in this business was due to the smooth progress of the application of the company's products in photovoltaics, semiconductors, special machine tools, robots and other industries. Among them, AC servo system product revenue increased by more than 48.41% year-on-year. ② Revenue from the Stepping System business was 340 million yuan, up 1.56% year on year. The slowdown in growth was mainly due to the company's stepper system sales being mainly through direct sales channels, which had few benefits under the strategy of vigorously expanding distribution channels in recent years. At the same time, the company's new product promotion in this business was slow. ③ Revenue from the control technology business was 86 million yuan, down 18.49% from the previous year, mainly due to the decline in demand in industries such as 3C and basic electronics, and the company's internal focus was not on this business.
Profitability is under pressure, mainly affected by product restructuring, increased sales & R&D investment, and equity payments
At 2023H1, the company's gross profit margin and net interest rate were 37.80% and 10.58% respectively, a year-on-year decrease of 2.51 and 6.12 pct, respectively.
There was a decline in gross margin, mainly due to: ① The share of the servo system industry in the first half of the year reached 34.53%, an increase of 7.49 pct over the previous year. The gross profit margin of this business was 27.68%, lower than the company's overall gross profit margin of 37.80%. ② The gross margin of the company's control technology, stepper system, and servo system businesses declined by 1.44, 2.12, and 1.61 pcts, respectively, year-on-year, mainly due to the relatively low gross margin and fierce market competition in the photovoltaic and other industries, where demand is growing rapidly in the downstream.
Net interest rate is under pressure, mainly due to: ① The decline in gross margin. ② The cost rate for the first half of the year was 30.05%, an increase of 7.64 pcts over the previous year. Among them, the sales expense rate, management cost rate, financial expense rate, and R&D expense rate were 9.50%, 6.35%, 0.36%, and 13.84%, respectively, and +2.89, +1.66, -0.17, and +3.26 pcts, respectively. Sales, management, and R&D expense ratios have increased, mainly affected by the expansion of marketing layout, increased R&D investment, and amortization of equity incentives.
③ In 2022, the company implemented the first round of equity incentive plans after listing, which had a positive effect on stabilizing people's hearts and minds during the period of change and future long-term development, but it also increased some share payment costs in the short term. Excluding share payments, the company's net interest rate for the first half of the year could return to 13.78%, narrowing the year-on-year decline to 2.92 pct.
The company is actively promoting model changes and system upgrades to pave the future rapid growth of various businesses ① Judging from the marketing model, the company has attracted nearly 100 outstanding foreign brand partners to join, jointly develop and serve tens of thousands of equipment customers from all walks of life, bringing incremental business and potential business by actively promoting the transformation and upgrading of the marketing model from “direct sales, distribution as supplementary and win-win” to “channel-oriented, complementary and win-win” marketing models.
② Judging from the product system, on the one hand, the company continuously optimizes mature products, enhances quality and price competitiveness, and increases market share; on the other hand, it continues to benchmark against advanced international standards, increase investment in R&D, and vigorously develop high-end products, thus gaining a leading edge in product technology and market, and achieving growth and sinking.
Specifically, in the servo system business, the company continues to increase R&D investment in the AC servo field, and product technology such as drives, motors, and encoders has advanced by leaps and bounds; AC servo L7 general series, L8 high-end series, and linear servo series, with overall performance reaching the level of similar products abroad; in the stepper system business, the company is a leading domestic stepper system enterprise, with a market share of over 35%; in the control technology business, the company focuses on developing small, medium and large PLC product lines, and remote IO modules. The large, medium and small PLC market launched in the past two years We have made continuous breakthroughs and achieved sales of tens of thousands of units or more.
③ Judging from the management system, the company has established a five-star management system of “modelized+processing+templateization+institutionalization+informatization” to activate the internal driving mechanism and achieve full authorization for supervisors at all levels, thereby reducing management complexity and operating costs, and improving operational efficiency.
④ Judging from the sales system, the company has established a “industry line+regional line+product line” three-line collaborative sales system. Empowered in multiple dimensions through technology, brand and channels, we work with partners to help customers shorten the management chain vertically and quickly integrate resources horizontally.
⑤ Judging from internal incentives, the company implemented the first round of equity incentive plans after listing in 2022, covering more than 300 employees within the company, which had a positive effect on the company's steady promotion of strategic changes and management upgrades.
Profit forecasting and investment advice
The company is one of the few specialized motion control enterprises in the domestic industrial control industry that also has a comprehensive R&D platform for motion controllers, drivers, and motors. Some of its core products have reached the international advanced level. As the company actively promotes model changes and system upgrades, various businesses are expected to experience rapid growth in the future. The company's net profit for 2023-2025 is estimated to be 20.1, 2.52 million yuan, and 284 million yuan, respectively, -8.88%, +25.39%, and +12.86% year-on-year, respectively. The corresponding PE is 27.61, 22.02, and 19.51 times, respectively, maintaining the “buy” rating.