Event: On the evening of March 20, the company released its 2023 annual report. In 2023, the company achieved operating income of 671 million yuan, an increase of 6.34% over the previous year; achieved net profit of 108 million yuan, an increase of 16.72% over the previous year; and realized deducted non-net profit of 60 million yuan, an increase of 27.60% over the previous year, in line with the performance report guidelines.
Self-developed core technology platforms drive high-end products, and gross margins have increased dramatically. In 2023, sales of digital oscilloscope products equipped with the company's self-developed core technology platform accounted for 76.03% of total oscilloscope sales, an increase of 5.64 pcts over the previous year; high-end (bandwidth ≥2 GHz) and high-resolution (vertical resolution ≥12 bit) digital oscilloscopes accounted for 54.29% of total digital oscilloscope sales. Benefiting from high-end products, the company's gross margin reached 56.45% in 2023, up 4.06 pcts year on year. Among them, the gross margin of digital oscilloscopes increased by 3.31 pcts year on year.
The new DHO series oscilloscope products have entered the release stage, and the product structure has been optimized. In 2023, the sales revenue of the company's DHO series products increased by 193.79% year on year, achieving high year-on-year growth. The company's DHO series includes DHO1000/4000 and DHO800/900. Based on a self-developed technology platform, the bandwidth covers the 200MHz-800MHz economical field. The high-resolution 12bit replaces the company's traditional oscilloscope products below the 1GHz bandwidth, and continuously optimizes the product structure. Since the DHO800/900 series was released in May 2023, it has experienced a new product climbing period and has now entered the release stage.
Acquired Endurance Electronics to collaborate in the field of RF and microwave. According to the company's January 9 announcement, the company plans to use 120 million yuan in cash to acquire 32.2581% of the shares of Endurance Electronics and to purchase 67.7419% of the shares from Wu Qiongzhi and others by issuing shares to achieve a wholly-owned acquisition. Tolerant Electronics is deeply involved in digital array technology, covering application fields such as remote sensing detection, quantum information, radio astronomy, microwave communication, etc. Through acquisitions and integration, the company can improve the company's system integration capabilities for industry applications, further improve the company's product layout in segments such as RF engineering systems and measurement and control systems, and form a collaborative resonance with the RF microwave product line to accelerate the launch of new products.
Investment advice: With technical barriers and cost advantages brought by self-developed platforms, the company is expected to rapidly expand the economical instrument market, break through high-end foreign blockades, and gradually transform its business to “hardware+software+service”. We predict that the company will achieve revenue of 8.79, 11.28, and 1,461 billion yuan in 2024-2026, and achieve net profit of 1.61, 2.32, and 312 million yuan, corresponding to current PE valuations of 44x, 30x, and 22x, respectively, maintaining an “incremental” rating.
Risk warning: risk of self-developed chip development and industrialization falling short of expectations; risk of new product promotion falling short of expectations; risk of large fluctuations in raw material prices; risk of limited procurement of core components.