Event: The company released its 2023 annual report and 2024 quarterly report. In 2023, it achieved revenue of 4.84 billion yuan, +0.6% year-on-year; realized net profit of 390 million yuan, +17.8% year-on-year. 2024Q1 achieved revenue of 740 million yuan, -15.9% year-on-year, and -53.4% month-on-month; realized net profit of 0.2 billion yuan, -140.9% year-on-year, and -113.2% month-on-month. The decline in single-quarter results was mainly due to the advance of the 3C project cycle, ahead of cost, and undelivered.
It binds to major core customers, and the domestic business is growing at a remarkable rate. By product, automation equipment achieved revenue of 4.15 billion yuan in 2023, +1.3% year-on-year; jigs and components achieved revenue of 690 million yuan, -3.8% year-on-year. By region, overseas business revenue was 1.52 billion yuan, or -33.7% year on year; domestic business revenue was 3.32 billion yuan, +31.7% year over year, mainly due to confirmed a significant increase in revenue from domestic customers in the Apple industry chain. By sector, the consumer electronics sector's revenue was 3.70 billion yuan, +4.2% year over year; the new energy sector had revenue of 8.4 billion yuan, -10.4% year over year; and the smart warehousing and logistics sector had revenue of 160 million yuan.
Profitability increased year-on-year in '23, and management capabilities were stable. In 2023, the company's gross margin was 33.8%, +1.5pp year on year; net margin was 7.9%, +1.1 pp year on year; the period expense ratio was 23.7%, +1.2pp year on year.
In 24Q1, gross margin was 32.7%, -2.1pp; net margin was -2.3%, -8.2pp; the period expense ratio was 36.6%, +6.0pp year on year. Although the cost ratio increased in a single quarter, the absolute value of various expenses remained relatively stable.
The 3C field is advancing in depth, and various fields are rapidly expanding. Consumer electronics sector: The company focuses on key projects such as flexible modular production lines and MR equipment. The flexible automated production line has achieved mass production, and second-generation MR production equipment for major customers is in a prototype state. New energy sector: The company has launched special lithium battery machines, intelligent charging and switching stations, automobile automation and other equipment. The company closely follows the steps of major customers going overseas and is supplying lithium battery special aircraft equipment for their overseas production lines. Semiconductor sector: The company continues to increase investment in research and development in the semiconductor field, focusing on market segments such as advanced packaging, optoelectronics, and AI computing power. The new product, the co-crystal chip, Xingwei EH9721, has now received batch orders, and the crystal soldering machine products are in a state of assembly.
Profit forecasting and investment advice. The company's net profit to mother for 2024-2026 is estimated to be 5.0, 6.5 million yuan, and 790 million yuan, corresponding to EPS of 1.13, 1.45, and 1.77 yuan, corresponding to the current share price PE of 20, 16, and 13 times, and the compound net profit growth rate for the next three years will be 26%. The company is a leader in 3C automation equipment in China. At the same time, it is rapidly expanding fields such as new energy and semiconductors, and has strong growth potential. The company was given 25 times PE in 2024, with a target price of 28.25 yuan. It covered for the first time, and gave it a “buy” rating.
Risk warning: Risks such as high customer concentration, consumer electronics recovery falling short of expectations, new market development falling short of expectations, and exchange rate fluctuations.