Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, the company achieved revenue of 1,060 billion yuan, +40.41% year on year; realized net profit of 117 million yuan, or -23.94% year on year, realized net profit deducted from non-return mother of 11,400 yuan, -22.32% year on year; gross sales margin of 40.89%, -1.04 pct year on year, net sales profit margin of 11.04% year on year, -9.34 pct year on year. On a quarterly basis, 23Q4 achieved revenue of 302 million yuan, +11.43%/+14.89% of the same period; realized net profit to mother of 0.32 million yuan, -46.60%/+10.28% year-on-month, and realized net profit without return to mother of 30 million yuan, or -48.09%/+8.62% year-on-month. 24Q1 achieved revenue of 269 million yuan, +16.10%/-10.87% YoY; realized net profit of 0.27 million yuan, -17.31%/-14.66% YoY, and realized net profit of 0.26 million yuan after deduction of non-return to mother, -19.39%/-15.36% YoY.
The results were slightly lower than market expectations.
Profitability is under pressure in the short term, and share payments and overseas expansion affect the calculation of expenses. The company's gross sales margin in 2023 was 40.89%, year-on-year -1.04pct, year-on-year - 9.34pct; 24Q1 gross sales margin 38.04%, net sales profit margin 10.00%. The slight decline in the company's gross margin was mainly due to price cuts for some products and rising prices of bulk raw materials. In terms of the cost ratio, the company's expense ratio for the 23-year period was 27.60%, +9.53pct. The sharp increase in the fee ratio during the period was mainly due to increased share payments, overseas development expenses, and increased R&D investment.
The middle and high-end market has a leading edge, and diversified products continue to expand into new fields. The company has a wide range of products. Among them, the leading products are power fuses. As the penetration rate of 800V high voltage fast charging for new energy vehicles increases, the company is expected to see rapid release of high-end products such as incentive fuses and smart fuses. In addition, the company's newly launched fuse-type lightning protection backup protectors have formed multiple series and specifications, and can be used in wind power, photovoltaics, energy storage and charging piles industries. The company's newly launched patch products can be used in new energy vehicles, new energy wind power generation, energy storage, communications and consumer markets, etc. The new products are expected to achieve major breakthroughs in segmented fields.
Investment advice: Considering fluctuations in raw material prices and increased competition in the industry, we lowered the company's net profit from 24-26 to 1.59/2.39/417 million yuan (the original forecast was 2.57/410 million yuan for 24/25), +35.6%/+50.5%/+74.6% year-on-year, corresponding EPS was 2.39/3.60/6.29 yuan, maintaining the “increase” rating.
Risk warning: downstream demand falls short of expectations; raw material prices fluctuate greatly; industry competition intensifies