The 2023 results and 1Q24 results fell short of our expectations
The company announced 2023 results: revenue of 909 million yuan, -10.13% year on year; net profit of 0.66 yuan per share, corresponding to profit of 0.66 yuan, -29.01% year on year. Due to the decline in the company's main PCB equipment business, the full year results were lower than our expectations; the company also announced 1Q24 results, revenue of 197 million yuan, -15.73% year over year, net profit of 31 million yuan, or -38.72% year on year. Due to the slow volume of new business, 1Q24 results fell below our expectations.
The main PCB equipment industry declined significantly last year, and the new energy business began to contribute a certain amount of growth. By business, the company's revenue for PCB electroplating equipment, general hardware, and new energy sources in 2023 was 356 million yuan, 156 million yuan, and 338 million yuan respectively, compared with a year-on-year ratio of -46.8%, +36.28%, and +111.79%, respectively, with gross margins of 39.37%, 27.67% and 49.57% respectively, of which 45 new energy coating equipment was sold in 2023. In 2023, the company's comprehensive gross profit margin was 41.7%, -0.1ppt, and the sales expenses ratio, management expense ratio, and R&D expenses ratio were 7.9%, 5.7%, and 8.8%, respectively, +1.2ppt, +1.3ppt, and +0.9ppt. At the end of 20203, the company's contract liabilities were 217 million yuan, down 17.31% from the beginning of the year, and inventory was 412 million yuan, up 10.02% from the beginning of the year.
Development trends
R&D reserves are scarce, and production expansion is being initiated to prepare for the industrialization of composite fluid collectors. In recent years, in the field of new energy equipment, the company has successfully developed roll-to-roll horizontal coating equipment, magnetron sputtering equipment, vacuum aluminizing all-in-one machines, photovoltaic copper plating equipment, etc., with a comprehensive layout of new energy composite copper foil, composite aluminum foil complete line solutions and photovoltaic copper plating solutions, leading the world in terms of technology. Last year, the amount of new energy coating equipment released by the company made up for the decline in the main business to a certain extent, but we believe that the industrialization progress of composite fluid collectors since this year has been affected by the industry cycle. Mass production has been delayed, and new orders have been limited. The company announced on April 3 that it has obtained a real estate property certificate for new energy coating equipment and will start expanding production to welcome the industrialization of composite fluid collectors at any time. We believe that the company's main PCB equipment business has now shown a recovery trend, the production capacity of new energy coating equipment is fully prepared, and ready to meet the capital expenses brought about by mass production of new technologies at any time.
Profit forecasting and valuation
As the main PCB equipment business declined more than expected last year, mass production of composite fluid was slow, and new business orders declined. We cut net profit in 2024 by 41% to 300 million yuan, and introduced net profit of 463 million yuan in 2025 for the first time.
The current stock price corresponds to 25 times the price-earnings ratio in 2024, but due to uncertainty about the progress of composite collector industrialization, we lowered our target price by 37% to 42.35 yuan, which corresponds to 32 times the 2024 price-earnings ratio and 21 times the 2025 price-earnings ratio, with 30% upside compared to the current stock price. Considering that the company's hydroelectroplating process has broad prospects and stable competitive position, it maintains a superior industry rating.
risks
The industrialization of composite fluid collectors fell short of expectations; the recovery of the main PCB industry fell short of expectations.