Incidents:
On March 20, 2024, Puyuan Precision 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; realized 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 27.6% over the previous year.
Investment highlights:
Revenue from new oscilloscope products increased steadily throughout 2023. In 2023, the company released the DS80000 series high bandwidth real-time digital oscilloscope with 13 GHz bandwidth, and various new products including the DHO 800/900 series; further enriching the company's product matrix. With the help of new products, in 2023, the company's high-end (bandwidth ≥2 GHz) and high-resolution (vertical resolution ≥12 bit) digital oscilloscopes accounted for 54.29% of the total sales volume of digital oscilloscopes, maintaining a steady growth trend; sales revenue of DHO series products increased 193.79% year on year.
Revenue from RF instruments has been growing steadily. In 2023, the sales revenue of the company's RF instruments increased by 14.41% year-on-year. In 2023, the company registered and established a subsidiary in Xi'an (Xi'an Puyuan Precision Electronics Technology Co., Ltd.), which mainly carries research and development work related to microwave radio frequency instruments and their hardware and software in general electronic measuring instruments, absorbs outstanding R&D talents from the western region, and strengthens the R&D and design capabilities and core technical competitiveness of the company's main business products.
Gross margin continued to rise, and sales and management expenses rates declined year-on-year. The company's overall gross margin in 2023 was 56.45%, up 4.06 pct year on year, and continued improvement. Among them, the gross margin of digital oscilloscope products was 58.26%, up 3.31 pct year on year. High-end and self-developed core technology platform products contributed significantly to the gross margin of digital oscilloscopes. The company's sales expense ratio and management expense ratio decreased by 0.89 pct and 0.74 pct to 15.75% and 9.5%, respectively, and the R&D expenses rate increased by 1.38 pct to 21.3% year on year.
Profit forecast and investment rating Due to the possibility of a phased slowdown in demand for downstream instrument updates, we downgraded the company's net profit to mother in 2024/2025/2026 to 1.4/1.887/253 billion yuan, respectively, corresponding to PE 48/36/27 times; downgraded to the “increase in holdings” rating.
Risks indicate the risk of macro-market fluctuations; risk of falling industry demand; R&D progress falling short of expectations; sales volume of high-end products falling short of expectations; progress in developing a new product market falling short of expectations; risk of tight component supply; risk of rising raw materials; risk of falling gross margin; overseas operations