Key points of investment

Q3 The growth rate of revenue and profit in a single quarter was corrected

In the first three quarters of 2024, the company achieved revenue of 0.799 billion yuan, -5.65% year on year; realized net profit of 0.099 billion yuan, -13.79% year over year; realized net profit deducted from non-mother 0.094 billion yuan, or -13.73% year over year. The decline in the company's revenue in the first three quarters was mainly due to weak overall demand in the machine tool industry. The decline in profit was higher than the decline in revenue due to intense market price competition and a slight decline in gross margin and an increase in cost rates during the period.

Looking at the single quarter, 2024Q3 achieved revenue of 0.279 billion yuan, +0.21% year over year; realized net profit of 0.037 billion yuan, +20.33% year over year; realized net profit without return to mother of 0.036 billion yuan, +23.89% year over year. The year-on-year growth rate of the 2024Q3 company's revenue and profit in a single quarter was corrected.

Gross margin declined slightly, and the cost ratio increased during the period

The company's gross margin for the first three quarters of 2024 was 24.17%, -1.25pct year on year, and the 2024Q3 gross margin for the single quarter was 26.20%, +1.13pct year on year, and +2.86pct month-on-month. The company's gross margin improved in the third quarter.

The company's net sales margin for the first three quarters of 2024 was 12.66%, -0.85pct year on year, and the net sales margin for 2024Q3 in a single quarter was 13.55%, +2.31pct year on year, and +0.29pct month-on-month. The net profit margin for the third quarter recovered simultaneously with the increase in gross margin.

In terms of the period cost ratio, the cost rate for the first three quarters of 2024 was 12.11%, +1.27pct. Among them, sales/management/finance/R&D expenses were 4.33%/3.49%/-0.70%/4.99%, respectively, +0.19pct/+0.54 pct/+0.15pct, respectively.

R&D innovation continues to increase, and market development continues to accelerate

1) The company continues to increase R&D and innovation, and its product strength continues to increase. In 2024, the company developed a new five-axis machine tool for various application scenarios such as aerospace and parts processing, improving the ability and processing efficiency to cope with complex processing scenarios. Product competitiveness continues to improve.

2) Accelerate market expansion and continue to explore overseas markets. The company actively participated in major exhibitions at home and abroad, actively promoted the company's products, and reached cooperation with key domestic industries and key customers. In addition, the company is continuously increasing its overseas market expansion efforts and improving the layout of overseas channels. The continuous improvement of the channel layout at home and abroad is expected to bring stronger sales capabilities to the company.

Profit forecast and investment rating: Considering the slowing pace of recovery in the manufacturing industry, we lowered the company's 2024-2026 net profit forecast to 1.32 (original value 1.80) /1.57 (original value 2.29) /1.87 (original value 2.73) billion yuan, respectively. The current stock price corresponding to dynamic PE is 20/17/14 times, respectively. Considering the continuous increase in the company's R&D investment and channel layout, we maintained a “gain” rating.

Risk warning: Raw material prices fluctuate, manufacturing recovery falls short of expectations, and industry competition intensifies.