Event: The company released its 2023 annual report and 2024 quarterly report.
In 2023/2024Q1, the company achieved revenue of 479/125 million yuan, a year-on-year increase of 42.48%/21.29%; realized net profit due to mother of 1.18/027 million yuan, an increase of 149.41%/81.14%; and realized net profit without deduction of 0.96/ 0.19 billion yuan, an increase of 351.44%/2.92% year-on-year.
Comment:
Client delivery stabilized and accounts receivable repayment conditions improved, driving rapid growth in 23 years of performance. The situation at home and abroad stabilized in 23 years, and product installation, commissioning and acceptance work at customer sites gradually became normal. The company achieved revenue of 479 million yuan, an increase of 42.48% over the previous year. Among them, fully automatic CNC roller grinder/maintenance and repair business/spare parts products achieved revenue of 4.04/0.35/ 0.39 billion yuan respectively, accounting for 84.33%/7.38%/8.09% of revenue respectively. The company's profit side growth rate is faster than the revenue side growth rate. The main reasons include the increase in revenue scale, which effectively dilutes period expenses, and the reduction in credit impairment losses due to improved repayment conditions. In 2023, the company's gross sales margin/net profit margin was 34.30%/25.62%, respectively, up 1.01 pct/9.34 pct year on year; the company's sales/management/ R&D expenses ratio was 4.09%/5.60%/7.02%, respectively, a year-on-year decrease of 0.98 pct/1.22pct/2.75pct; in addition, benefiting from improved accounts receivable repayment, the company's credit impairment losses recovered from 22 to 0.21 million yuan in 23.
24Q1's client acceptance continues to improve, and new products are expected to gradually be released in 24 years. In 24Q1, the company's product acceptance increased, driving a 21.29% year-on-year increase on the revenue side. The company's gross sales margin/net margin was 31.77%/22.36%, respectively, down 0.97 pct/y. Currently, the company has focused on developing new products such as submicron high-end composite grinding series products, precision thread grinders, and CNC linear guide grinders, etc., and officially launched them on the market. The gradual release of new products is expected to drive the company's performance growth.
A leader in CNC roller grinders, based on precision grinding and self-developed CNC systems, new grinding machine products are expected to contribute to growth momentum.
In 23 years, the company has continued to expand the high-end CNC roller grinder market, providing relevant equipment products and solutions for customers in the new high-end metal sheet, strip, foil industry and high-end paper industry. In terms of new products, the clamping roundness of the submicron high-end composite grinding series products launched by the company can reach up to 0.2 μm, and the core technical indicators are comparable to the advanced level of similar products from top international companies; precision thread grinding machines reach the same level as world-class products, and the processing accuracy level of standard screw specimens for grinding can reach P0 level; CNC linear guide rail grinder products can process two guide rails at the same time. The relevant core technical indicators match the advanced level of similar products from top international companies.
The company has also developed its own CNC system. The installation rate of the intelligent grinding CNC system in the company's equipment orders in 2023 reached 35%, and it has successively implemented the application of the CNC system for new products. In addition, the ultra-thin grinding wheel for semiconductor packaging processing developed by the company has now completed project technology development and is in the prototype trial production stage. This product is expected to solve stuck neck problems in key fields such as wafer cutting.
Profit forecast, valuation and rating: Huachen Equipment is a leader in the field of high-end CNC roller grinders, and the CNC system has achieved independent research and development; based on precision grinding technology, it has launched new products such as high-end composite grinding series products, precision thread grinders, CNC linear guide grinders, etc., to position domestic replacement for high-end equipment. Maintain the 24/25 net profit forecast of 1.51/195 million yuan, add a 26-year net profit forecast of 245 million yuan, corresponding EPS of 0.60/0.77/0.97 yuan, and the PE corresponding to the current stock price is 39x/30x/24x, maintaining the “increase in holdings” rating.
Risk warning: Market competition increases risk, accounts receivable recovery risk, and fund-raising projects fall short of expectations.