Event: The company released its 2023 annual report and 2024 quarterly report.
The 2023 results are under pressure, and factors such as the relocation of the production base and the failure of the Vietnamese factory to reach production affected profits in the short term.
The company achieved operating income of 2,543 billion yuan in 2023, a year-on-year decrease of 14.09%; realized net profit of 140 million yuan, a year-on-year decrease of 43.20%; net profit after deduction of 126 million yuan, a year-on-year decrease of 46.25%. Overseas markets tend to be de-inventoried in the second half of 2023. Affected by this, the company's revenue declined. At the same time, the company's profit declined sharply due to the relocation of the company's production base in 2023 and the failure to reach production capacity for the new production base project in Vietnam, as well as the year-on-year decline in operating income. We believe that the company is currently greatly affected by the relocation of production capacity and inventory cycle. With the recovery of the global economy and the gradual implementation of production capacity, the company is expected to enter a rapid growth range.
There was a slight decline in 2024Q1 revenue, and the sharp decline in net profit to mother was mainly due to impairment, and there were no significant changes in the company's operations. 2024Q1 achieved operating income of 608 million yuan, a year-on-year decrease of 6.34%; realized net profit to mother of 06 million yuan, a year-on-year decrease of 80.03%. The sharp decline in net profit attributable to mother was mainly affected by the expansion of impairment. The company's 2024Q1 asset impairment loss was 19.725 million yuan, and credit impairment losses were 987,400 yuan, an increase of 20.5853 million yuan and 8.0387 million yuan respectively over the same period of the previous year, which had a significant impact on net profit. Excluding impairment factors, there were no major changes at the company's operating level. The 2024Q1 gross margin for a single quarter was 38.08%, which was basically the same as the previous year.
Short-term performance adjustments will not change the long-term growth logic, waiting for downstream repairs and the expansion of business related to dexterous hands. The company is a global manufacturer of advanced motors and drive systems, and has achieved in-depth development in the fields of stepper motors, brushless motors, and hollow cup motors. In February 2024, the company announced that it plans to invest no more than US$65.14 million in Vietnam's wholly-owned subsidiary Ming Zhi Industrial (Vietnam), which is expected to further optimize the domestic and foreign production capacity structure, continue the industrial chain, and better support overseas customers. We believe that the company is leading in global deployment and is expected to benefit from the global economic recovery process. At the same time, the company's micro motor product matrix has been improved, and dexterous hand-related products are worth looking forward to.
Profit forecasting and investment advice. Due to the company's downstream recovery falling short of expectations, we lowered the company's profit forecast. It is estimated that the company will achieve operating income of 30.82/38.43/4.470 billion yuan in 2024-2026 and achieve net profit of 2.53/3.76/503 billion yuan. The current market value corresponds to PE of 96.5/65.0/48.6X. In the long run, the company is expected to fully enjoy leading valuation premiums and maintain a “buy” rating.
Risk warning: manufacturing expansion falls short of expectations; industry competition increases risk; localization of robots falls short of expected risk.