Core views:
Performance grew steadily, and gross margin continued to rise. Puyuan Precision Electronics released its 2023 annual report. In 2023, the company achieved revenue of 670 million yuan, an increase of 6.34% over the previous year, and realized net profit of 108 million yuan, an increase of 16.7% over the previous year. 23Q4 achieved revenue of 198 million yuan, a year-on-year decrease of 8.5%; realized net profit of 40 million yuan, a year-on-year decrease of 5.8%. There was negative revenue and profit growth in the 23Q4 quarter. To a certain extent, it was affected by relatively weak demand from downstream customers. Customer R&D investment was gradually tightened, but we are still optimistic about long-term demand growth.
The company's gross margin for the full year of '23 was 56.5%, up more than 4pct from '22. Looking at 23Q4 alone, the gross margin for the 23Q4 quarter was 56.3%. When quarterly revenue declined slightly, the gross margin for the single quarter still increased by 3 pct year-on-year compared to 22q4, indicating that the iterative effect of high-end products was remarkable.
Products continue to be optimized and upgraded, and high-end frequency domain products can be expected. According to financial reports, the company's revenue from oscilloscopes equipped with core devices reached 76% in '23, an increase of 5.6 pct compared to 2022; on the oscilloscope structure side, the revenue of oscilloscopes with a bandwidth of 2 GHz or more and 12 bits or more accounted for more than half; the revenue growth rate of DHO series products reached 194%, and the time domain product structure continued to be optimized. In '23, the company's microwave RF products achieved revenue growth of 14.4%, and high-end microwave RF products are expected to accelerate development.
The company's R&D expenses rate in 2023 was 21.3%, maintaining a high level of investment; on the sales model side, the company already accounted for more than 26% of direct sales revenue in 2023, corresponding to which the top five downstream customers accounted for 32.4% of revenue. The company's product iteration, the increase in the share of direct sales, and the increase in the revenue share of major customers are optimistic about the growth brought about by the company's continued high-end transformation.
Profit forecasting and investment advice. The estimated 24-26 revenue is 8.6/10.5/1.27 billion yuan, and net profit to mother is 1.53/1.99/258 million yuan. The company is a domestic oscilloscope leader. It is concerned about the progress of new products in 24 years, and also focuses on the simultaneous development of frequency domain products. Consider comparable company valuations, give the company 12 times PS in 24 years, give a reasonable value of 56.01 yuan/share, and maintain a “buy” rating.
Risk warning. Risk of new product development and commercialization falling short of expectations; risk of major direct sales customers falling short of expectations; risk of fluctuations in raw material prices.