Incidents:
On April 30, Quick Smart announced its 2023 annual report and 2024 quarterly report: in 2023, the company achieved revenue of 793 million yuan, a year-on-year decrease of 12.07%; realized net profit of 191 million yuan, a year-on-year decrease of 30.13%; realized net profit without return to mother of 150 million yuan, a year-on-year decrease of 36.93%. In 2024Q1, the company achieved revenue of 225 million yuan, an increase of 4.08%; realized net profit of 60 million yuan, an increase of 8.63% year on year; realized net profit without deduction of 49 million yuan, an increase of 6.26% year on year.
Investment highlights:
The performance of precision welding equipment is under pressure, and the release of solid crystal bonding and packaging equipment is accelerating. In 2023, the company's precision welding and assembly equipment business achieved revenue of 528 million yuan, a year-on-year decrease of 20.24%, mainly due to the boom in the consumer electronics industry. The company increased product research and development, accelerated international layout, and participated in NPI projects for major customers to reach a record high, in line with the global layout of major customers in Vietnam and other places. In addition, the company's self-developed selective wave soldering equipment received breakthrough orders from leading companies such as BYD; the complete intelligent manufacturing equipment business achieved revenue of 140 million yuan, an increase of 26.68% over the previous year; the visual inspection process equipment business achieved revenue of 1.00 million yuan 100 million yuan, a year-on-year decrease of 11.40%; the solid-crystal bonding and packaging equipment business achieved revenue of 0.24 billion yuan, an increase of 57.40% over the previous year. The company has now completed prototyping for dozens of silicon carbide packaging companies. Some customers have completed shipments, and are expected to achieve performance breakthroughs in 2024. Furthermore, the company's self-developed high-speed eutectic Die Bonder equipment has completed customer verification and entered mass production.
Profitability increased significantly in the first quarter. In 2023, the company's gross margin was 47.30%, down 4.62 pct year on year, and net profit margin was 24.10%, down 6.23 pct year on year. By business, the gross margin of the company's precision welding and assembly equipment business in 2023 was 52.06%, down 2.48 pct; the gross margin of the intelligent manufacturing complete equipment business was 27.93%, down 12.25 pcts year on year; the gross margin of the visual inspection process equipment business was 53.12%, up 1.74 pct year on year; the gross margin of the solid crystal bonding and packaging equipment business was 33.85%, up 3.26 pct year on year. 2024Q1's gross margin was 49.51%, down 1.73 pct year on year, up 12.49 pct month on month, net profit margin was 26.56%, up 1.11 pct year on year, up 9.06 pct month on month. The cost rate for the 2023 company period was 25.80%, up 4.56 pcts year on year, and the 2024Q1 company period cost rate was 24.32%, down 2.27 pct year on year.
Profit forecast and investment rating We expect the company to achieve revenue of 1,074, 13.63, and 1,694 billion yuan in 2024-2026, and achieve net profit of 2.67, 3.50, and 462 million yuan, corresponding to the current price of PE, which is 22, 17, and 13 times, respectively. The company is a leading domestic precision welding equipment enterprise. It actively lays out high-end equipment for power semiconductor packaging and advanced packaging. It covered it for the first time and gave it a “buy” rating.
Risks suggest that the recovery of the consumer electronics industry falls short of expectations; new product development progress falls short of expectations; risk of product technology iteration; risk of domestic replacement of semiconductor equipment falling short of expectations; increased industry competition; risk of overseas expansion falling short of expectations; risk of high R&D investment not being converted into revenue in a timely manner; and risk of declining gross margin.