Incidents:
The company announced its 2023 and 2024Q1 results. The company's revenue for 2023 was 1,232 million yuan (yoy +34.24%), net profit attributable to mother was 142 million yuan (yoy +78.11%), and net profit after deducting non-return to mother was 106 million yuan (yoy +255.07%);
The 2023 results fell short of market expectations. 2024Q1 achieved revenue of 206 million yuan (yoy +54.72%), net profit to mother of 101 million yuan, turning loss into profit year over year, net profit after deducting non-return to mother of -014 million yuan. 24Q1 results were in line with market expectations.
Comment:
The release of production capacity was compounded by the release of aerospace demand, and revenue grew rapidly. According to the company's announcement, the company's Q1 revenue in 2023 and 2024 both achieved high year-on-year growth. Our analysis suggests that: 1) By product, the revenue of 3D printing customized products, self-developed 3D printing equipment and 3D printing raw materials increased by 34.45%/26.46%/98.98%, respectively, compared to the previous year; 2) By industry, aerospace and industrial machinery revenue increased 8.26%/91.37% respectively; 3) On a quarterly basis, the high revenue growth of 2024Q1 was mainly due to customized 3D printing products, self-developed equipment and raw materials increase in operating income. As the company continues to be deeply involved in the aerospace field, new civil markets continue to be developed, and the company's production capacity is expanded, and revenue is expected to continue to grow rapidly in 2024.
Changes in product structure affect gross profit margin, and optimization of management expenses helps reverse losses in net profit. According to the company's announcement, the company's net profit to mother increased year-on-year in 2023. Our analysis: 1) On the gross margin side, the company's gross margin in 2023 was 48.97%, a decrease of 5.58 pcts compared to last year. By product, 3D printing customized products, self-developed 3D printing equipment and 3D printing raw materials decreased by 9.09%/0.55%/4.69% to 49.56%/50.62%/34.29% compared to last year; by industry, aerospace and industry decreased by 3.46%/5.99% to 53.38%/43.93% compared to last year; 2) On the net margin side, according to the company announcement, the company's equity incentive amortization expenses for 2021/2022/2023 were 1.75/69/89 million yuan, respectively 2021/2022 /2023 adjusted net profit to mother was 121 million yuan/245 million yuan/231 million yuan, respectively, with net interest rates of 22.1%/26.6%/18.8%, respectively; 3) On the expense side, the expense ratio for the 2023/2024Q1 period was 37.00%/53.50% respectively, a decrease of 13.45/19.76pcts compared with the same period last year, of which the 2023/24Q1 management expenses ratio was 12.25/ 15.96%, respectively, a decrease of 11.82/11.86 pcts from the same period last year. Mainly due to a reduction in amortization expenses for equity incentives. With the expansion of the downstream market, process improvement, and cost control capabilities, the company's performance is expected to maintain rapid growth in the future.
The number of projects under construction has increased significantly, and the company's production expansion continues. According to the company's announcement, as of the end of 2024Q1, the company's projects under construction were 439 million yuan, an increase of 29.12% over the end of last year; the company's inventory was 607 million yuan, an increase of 17.86% over the end of last year; and the company's accounts receivable and notes were 1,010 billion yuan, which remained high from month to month. According to our analysis, 1) the month-on-month increase in inventories and construction projects is mainly due to the company entering a period of rapid expansion and an increase in related investment; 2) maintaining high levels of accounts receivable and notes is related to the high proportion of military goods in the downstream customer structure.
Where metal additive manufacturing is scarce, it has the advantage of raising capital to expand production and expand scale. 1) The company provides customers with the design of customized metal 3D printing products and upstream localized 3D printing raw materials through its own equipment to solve the scarce targets of suppliers for comprehensive solutions in the field of metal additive manufacturing. 2) The company actively raised capital and expanded production to break through capacity bottlenecks. The design capacity of the metal 3D printing raw material production line was increased by 800 tons in '22, further expanding its order acceptance capacity and business scale, and expanding its scale advantage; 3) The company focuses on the high-margin aerospace sector and continues to explore new markets and new fields, and is expected to fully benefit from the release of downstream demand in the future.
Maintain the 2024-25E profit forecast and “buy” rating. Considering the continued release of demand in the company's downstream aerospace sector, we maintain the 2024-2025E net profit forecast of 311/503 million yuan, and the additional 2026E net profit forecast of 705 million yuan. The current stock price corresponds to PE 54/34/24 times, respectively. As a scarce target for metal additive manufacturing, downstream demand is being released at an accelerated pace, and performance is expected to maintain rapid growth, so it maintains a “buy” rating.
Risk warning: increased competition in the field of metal additive manufacturing; risk of profit fluctuations due to equipment procurement system reform; risk of reliance on imports for key core components of additive manufacturing equipment