Performance: The company achieved operating income of 2,115 billion yuan in the full year of 2023, a year-on-year increase of 27.13%, and achieved net profit of 27.0907 million yuan, an increase of 45.70% over the previous year. Net profit after deducting non-recurring profit and loss was 79.016 million yuan, an increase of 11.14% over the previous year. Looking at a single quarter, the company's Q4 revenue was 819 million yuan, up 18.43% year on year. Net profit due to mother was 60.7098 million yuan, down 16.25% year on year. Net profit after deducting non-recurring profit and loss was 33.4569 million yuan, down 2.30% year on year.
By business, CNC systems and machine tools: Revenue in 2023 was 892 million, up 26.22% year on year, accounting for 42.18% of revenue, gross margin of 38.65%, up 2.76 pct year on year. High-end product structure led to an increase in gross margin. In the field of high-end CNC machine tools, the company launched the Huazhong 8-type high-end 5-axis CNC system product package, cooperated with companies such as Shandong Haomai, Dongguan Evermi, Wuzhong Machine Tool, Tianshui Starfire, Ningjiang Machine Tool, Fujian Weino, Ningbo Haitian and other companies to jointly develop vertical, horizontal, and gantry five-axis machining centers to achieve the transformation of high-end CNC systems in Huazhong from “usable” to “easy to use and durable”; in the field of general-purpose CNC machine tools, the company actively adjusts its strategy and adopts the policy of sinking high-end technology to make full use of the Zhonghua 8 CNC system Technical advantages in supporting models such as milling, grinding, and 3C continue to advance and Steady improvement.
Industrial robots and intelligent production lines: 2023 revenue of 1,118 billion yuan, up 35.53% year on year, accounting for 52.69% of revenue, gross margin of 26.88%, -2.05pct year on year. The company continues to enrich its product line, and the heavy load series product line continues to expand, covering loads of 210 kg, 300 kg and 360 kg; it has released a series of industrial collaborative robot products, covering loads of 5 kg, 7 kg, 10 kg, and 16 kg. However, due to fierce competition in the robotics industry, gross margin declined.
Other business: The revenue of special equipment in 2023 was 63.2627 million yuan, a year-on-year decrease of 28.19%, accounting for 2.99% of overall revenue. New energy vehicle support revenue reached 21.799 million yuan in 2023, up 96.28% year on year, accounting for 1.03% of revenue.
The gross margin declined slightly, mainly affected by the decline in the gross margin of industrial robots. The company's gross margin in 2023 was 32.92%, down 1.14pct year over year. Q4 gross margin in a single quarter was 33.42%, down 3.77pct year on year and 4.12pct month-on-month. The cost rate for the period was 33.34%, a year-on-year decrease of 2.32pct. Among them, the sales expenses ratio was 9.09%, the R&D expenses ratio was 14.56%, the management expenses ratio was 8.09%, and the financial expenses ratio was 1.6%.
Maintain an “Overweight” rating. Considering that demand in the machine tool industry is still recovering, we lowered the company's 2024-2025 performance. We expect revenue for 2024-2026 to be 25.8/30.96/36.53 billion yuan, +22%/20%/18% year-on-year, and net profit to mother of 1/1.6/220 million yuan, +277%/58%/36% year-on-year. The company will fully benefit from the localization of high-end CNC systems, have plenty of room for future growth, and maintain a “gain” rating.
Risk warning: Machine tool recovery falls short of expectations; 3C boom continues to decline; domestic substitution progress falls short of expectations