Incident: The company released its report for the first quarter of 2023. In Q1 2023, the company achieved operating income of about 435 million yuan, a year-on-year decrease of 38.06%; net profit attributable to shareholders of listed companies was 101 million yuan, a year-on-year decrease of 60.07%.
Key points of investment
Net profit for Q1 2023 fell 60.07% year-on-year, and is expected to recover in the medium to long term. Q1 The company achieved a decline in operating income, a year-on-year decrease of 38.06% due to the weakening of short-term sentiment in the downstream market and a decline in customer demand for its own production and agency business. Guimu's net profit fell 60.76% year on year, which was even greater than the decline in revenue. This was due to rising labor costs. At the same time, the company increased business-related expenses to consolidate its market share. In the medium to long term, the company is determined to iron out fluctuations in short-term revenue and profit declines.
Contract debt increased 7.6% in Q1 2023, and downstream demand is about to pick up. Contract debt during the reporting period was 3.47 million yuan, up 7.6% from the end of 2022, indicating a recovery in downstream demand and an increase in future revenue. During the reporting period, the company's comprehensive gross margin was 49.91%. In 2022, the gross margin of the company's self-produced business reached 80.91%, and the gross margin of the agency business was 10.78%. The downstream production of self-produced electronic components was in highly reliable fields such as aerospace, weapons, and electronic information, bringing a steady income and profit guarantee to the company.
Deepen the industrial layout, actively expand market space, and demonstrate determination to develop. The company has built a product system centered around porcelain dicapacitors, filters, and microwave modules to strengthen market expansion.
Based on the business advantages of existing porcelain dicapacitors, the company has horizontally expanded products such as thin-film microstrip circuits and resistive networks, expanding market space in the military and civilian fields; the company has a complete range of filter products, which basically covers the types of anti-interference filters currently used in power supplies. Various products can replace imported products; microwave module products, microcontrollers, and microprocessors form a series of products that can form control units for various application scenarios. The technology is at the forefront of the industry. The company deepened its industrial layout around its main business, continuously expanded market boundaries, and demonstrated its determination to develop.
Profit forecast and investment rating: Considering the pace of downstream equipment release, we expect net profit to the mother in 2023-2025 to be 992/1206/1,372 million yuan. The corresponding PE is 17/14/12 times, respectively, covered for the first time, and gave a “buy” rating.
Risk warning: 1) downstream demand and order fluctuations; 2) company profits fall short of expectations; 3) market systemic risk.