Description of the event
The company released its report for the first quarter of 2024. In 24Q1, the company achieved operating income of 443 million yuan, a year-on-year increase of 15.08%, and net profit to mother of 75.63 million yuan, an increase of 2.96% year-on-year, after deducting non-net profit of 68.51 million yuan, an increase of 4.9% year-on-year.
Incident comments
Currently, global transformer demand has entered a boom cycle, and the company's revenue growth rate has reached double digits. It is expected that due mainly to the boom in downstream transformer demand, amorphous shipments will increase, and the company's capacity utilization rate will further increase.
In terms of gross margin, the company's overall gross margin reached 30.25%, up 1.19 pct from the previous year, reaching the highest level of gross margin in the first quarter since listing. It is expected that the company's production capacity will gradually increase, and large-scale effects will be evident. At the same time, the company's R&D will drive products to further reduce costs and increase efficiency.
In terms of cost ratio, the company's overall three rates reached 10.81%, up 3.09pct year on year. Among them, sales rate reached 2.25%, down 0.09pct year on year, management rate reached 2.47%, up 0.46pct year on year, R&D rate reached 6.09%, up 2.72 pct year on year. R&D expenses are a major growth factor, indicating that the company is based on R&D, and that many new materials and applications are currently being promoted.
In terms of cash flow, 24Q1 achieved a net operating cash flow of 13 million yuan, which performed well.
The company covers R&D, production and sales of various advanced materials such as amorphous alloys, nanocrystalline alloys, magnetic powders, etc., and is mainly used in various booming fields such as electricity, photovoltaics, rail transit, data centers, home appliances, new energy vehicles, etc. The rapid development of new fields such as new infrastructure and new energy provides a broad market space for the new materials industry, and also places higher demands on the quality, performance and guarantee capabilities of new materials, and has high technical barriers.
Relying on a strong R&D system and team, the company has now mastered the technical achievements of many products that have reached leading international and domestic levels, such as “next-generation first-class energy-efficient amorphous alloy special amorphous alloy”, “wide and ultra-thin iron-based nanocrystalline strip engineering technology development and application”, and “high-reliability, high-performance amorphous alloy closed circuit three-dimensional iron electrostatic transformers”.
At present, the company has become the largest supplier of amorphous alloy thin strips in the industry, with an annual design capacity of 90,000 tons. At the same time, the company continues to explore the international market, and the overseas sales volume and scale of amorphous alloy products are growing rapidly, and its main customers are distributed in India, South Korea, Vietnam and other countries.
Considering the trend of high efficiency and energy efficiency of transformers, the amorphous penetration rate is expected to continue to increase. As a global amorphous leader, the company can continue to benefit. The company's net profit in '24 is estimated at 383 million yuan, corresponding to about 25.7 times the PE valuation. Maintain a “buy” rating.
Risk warning
1. The number of tenders for amorphous transformers in the power grid fell short of expectations;
2. The company's market development for nanocrystalline products and magnetic powder products fell short of expectations.