Incidents:
Hanzhong Precision Machinery announced the 2023 Annual Report and 2024 Quarterly Report on April 27: In 2023, the company achieved revenue of 3,852 billion yuan, up 17.96% year on year; realized net profit of 865 million yuan, up 34.24% year on year; realized net profit without return to mother of 840 million yuan, an increase of 38.75% year on year. In 2024Q1, the company achieved revenue of 749 million yuan, an increase of 8.61% year on year; realized net profit of 146 million yuan, an increase of 25.64% year on year; realized net profit without deduction of 136 million yuan, an increase of 24.25% year on year.
Investment highlights:
The main compressor and vacuum business is growing steadily. In 2023, the company's compressors (group) achieved revenue of 1,947 billion yuan, an increase of 12.04%; vacuum products achieved revenue of 1,642 billion yuan, an increase of 28.67%; parts and maintenance achieved revenue of 212 million yuan, an increase of 14.28%; and casting products achieved revenue of 52 million yuan, a year-on-year decrease of 22.45%.
Profitability has improved markedly. In 2023, the company's gross margin was 40.32%, up 4.54pct year on year, and the net profit margin to mother was 22.45%, up 2.72 pct year on year. By business, the gross margin of the company's compressors (group) in 2023 was 34.31%, up 2.87 pct year on year; the gross margin of vacuum products was 47.89%, up 5.28 pct year on year. The gross margin for parts and maintenance was 43.61%, up 4.42pct year-on-year. The gross margin of casting products was 12.89%, a year-on-year increase of 4.16pct. 2024Q1's gross margin was 37.08%, up 0.23 pct year on year, and net profit margin was 19.53%, up 2.65 pct year on year.
The cost rate for the 2023 company period was 14.42%, up 1.71 pct year on year, and the cost rate for the 2024Q1 company period was 14.40%, down 3.73 pct year on year.
Profit forecast and investment rating We expect the company to achieve revenue of 42.30, 47.22, and 5.470 billion yuan in 2024-2026, and achieve net profit of 957, 11.18, and 1,294 billion yuan, corresponding to the current price of PE, which is 12, 10, and 9 times, respectively. The company is a leader in domestic screw refrigeration compressors, leading the domestic replacement process for pan-semiconductor vacuum pumps. It covered it for the first time, and gave it a “buy” rating.
Risks suggest that semiconductor vacuum pump customer verification progress falls short of expectations, new product development progress falls short of expectations, risk of technological iteration, increased industry competition, risk of fluctuating raw material prices, inventory impairment and accounts receivable risk.