Description of the event
The company released its 2024 quarterly report. 2024Q1 achieved revenue of 3.391 billion yuan, a year-on-year increase of 24.58%, a net profit of 590 million yuan, +18.19% year-on-year, and net profit after deduction of 586 million yuan, or +20.31% year-on-year.
Incident comments
Revenue and profit growth exceeded expectations. 2024Q1 achieved revenue of 3.391 billion yuan, +34.44% year over year, achieved net profit of 590 million yuan, +18.19% year over year, and realized net profit of 586 million yuan without return to mother, +20.31% year on year. Beginning in Q2 2023, the company's revenue growth rate declined quarterly, and the first quarter of 2024 began to benefit from high automation business growth driven by localization. The company reversed the previous decline in one fell swoop and re-entered a rapid growth cycle.
The shift in high-cardinality superposition structures has led to a significant decline in gross margin. The gross margin of 2024Q1 was 32.68%, down 7.58pct from 23Q1. The apparent gross margin decline was due, on the one hand, to a high base (40.26% was the highest single-quarter gross profit margin in history in the past few years) in 2023Q1. On the other hand, it benefited from the increase in the proportion of the continuous rapid growth structure of the automation business driven by localization and intelligent manufacturing. The gross margin of automation was relatively low, leading to a decline in gross margin.
Continuous optimization of business quality. The net cash flow from 2024Q1's operating activities reached 470 million yuan, +24.58%. The sharp improvement in net cash flow was mainly due to a sharp decrease in cash outflow (that is, a significant increase in upstream arrears capacity) and a corresponding decrease in inventory preparation. 2024Q1 inventory was 3,098 billion yuan, down 204 million yuan from 2023Q1, and 2024Q1 contract debt of 3,052 billion yuan decreased by 402 million yuan compared to 2023Q1. Automation is the company's core growth driver at this stage. The automated order release cycle mainly began in the second quarter, and the pace of order signing affects contract debt performance. 2024Q1 sales expenses were 63 million yuan, +12.55% year on year, management expenses were 97 million yuan, -9.14% year on year, R&D expenses 320 million yuan, and -1.47% year on year. The results of personnel integration gradually became apparent after two years.
With the acquisition of Turing robots, the manual control layout is becoming more and more complete. In December 2023, the company increased the capital of Turing Robots by 195 million yuan to acquire 42% of the shares. In 2024, Baoxin Turing Robots visited the Hanover Industrial Fair in Germany to showcase various industrial robot solutions such as collaborative palletizing workstations, integrated force-controlled grinding workstations, industrial welding kits and process packages, collaborative welding robot mobile workstations, and dual-machine collaborative workstations. Currently, the full range of Turing Robot products have passed CR, CE, EAC and KCS certifications to ensure that they meet the high safety and application standards of the European market. Robots are the core part of intelligent manufacturing in future high-end manufacturing, and the acquisition of Turing Robotics is expected to help Baoxin lay out new downstream scenarios.
Profit forecasting and valuation analysis:
The company is expected to achieve net profit of 31.17, 41.04, and 5.373 billion yuan in 2024-2026, corresponding to PE 31.2, 23.7, and 18.1 times, maintaining a “buy” rating.
Risk warning
1. The progress of domestic industrial control substitutions such as PLC falls short of expectations; 2. The downturn in downstream industries such as steel affects the company's investment in automation and informatization.