farmbingo|普源精电(688337)：2024Q1利润承压明显 发布新一轮股权激励为长期发展增添动力

Institution: Citic Construction Investment (601066) Securities

Researcher: Lu Juan / Li Changhong

Core viewpoints

2024Q1's revenue fell by 3%.Farmbingo.54%FarmbingoThe decline is 5 percentage points lower than that of 2023Q4; with the advance of the equipment renewal policy, the education field is expected to support the demand for instruments. The company's profit end was obviously under pressure in the first quarter, mainly due to the increase in initial depreciation of R & D centers and subsidiaries, and the annual expense end is expected to be gradually diluted. The company issued a new round of equity incentive plan, the performance growth target in the next two years is further defined, by binding the core backbone employees and the interests of the company, to add momentum for long-term development.

Event

In the first quarter of 2024, the company achieved revenue of 151 million yuan, year-on-year-3.54%, net profit of 6.3072 million yuan, year-on-year-72.75%, and non-return net profit of-6.6938 million yuan,-151.38%.

Brief comment

1. 2024Q1 R & D + management expenses have increased, and the phased pressure on net profit has significantly reduced the company's revenue by 3.54% in the first quarter of 2024, which is 5 percentage points lower than that of 2023Q4. At the industry level, the overall demand of the current electrical measuring instrument industry is still in the doldrums and remains to be bottomed out; with the promotion of the equipment renewal policy, the education field is expected to support the instrument demand. At the company level, 2024 is expected to be the first year of the company's 13GHz high-end oscilloscope and 12bit high-resolution oscilloscope, and revenue growth is expected to improve quarter by quarter. 2024Q1's homing net profit decreased significantly and deducted the non-homing net profit loss, mainly due to a 41.57% increase in the company's R & D expenses over the same period last year, as well as a substantial increase in management expenses caused by the depreciation of factories in Shanghai subsidiaries and the depreciation of use rights assets of Malaysian subsidiaries.

2024Q1's comprehensive gross margin slightly increased 0.58pct to 54.81% compared with the same period last year. With the arrival of the peak season, customers increase their purchases of high-end products, and there is room for improvement for the whole year. During the period of 2024Q1, the expense rate significantly increased 16.68pct to a high of 61.89% compared with the same period last year, exceeding the gross profit margin in stages; of which the sales expense rate was from + 0.54pct to 16.57%, and the management expense rate was from + 4.85pct to 14.26%, mainly due to the increase in initial depreciation of subsidiaries in Shanghai and Malaysia. The R & D expense rate is from + 9.09pct to 28.52% compared with the same period last year, which is mainly due to the opening of Xi'an R & D Center and the company's efforts to develop new products. With the launch and volume of new products, the R & D expense rate is expected to fall back to the historical average level of about 20%; the financial expense rate is from + 2.21pct to 2.54% compared with the same period last year. 2024Q1's net interest rate was-8.48pct to 6.31% year-on-year.

2. Upgrade quality, increase efficiency and return, upgrade from product supplier to comprehensive solution provider ① layout overseas production capacity: the production base in Malaysia is expected to be put into use in May 2024, forming an annual production capacity of 80,000 electronic measuring instruments as soon as possible. ② M & A collaboration: actively promote the integration work after the acquisition of Nissan Electronics, realize the transformation and upgrading from a hardware-based supplier of electronic measuring instruments to a comprehensive solution provider, and will achieve in-depth layout in the field of quantum technology. ③ focuses on shareholder returns: the company plans to distribute cash dividends totaling 92.5617 million yuan (including tax) in 2023, accounting for 85.74% of its net profit. In addition, the company plans to use 3000-50 million yuan of its own funds to buy back shares for equity incentives.

3. Issue a new round of equity incentive plan, bind the core backbone employees and the interests of the company, and add momentum for long-term development. The company issued a 2024 restricted stock incentive plan (draft). The number of restricted shares to be granted is 2.8 million shares, accounting for about 1.5125% of the company's total share capital, including core core employees and other people (80 people) that the board of directors believes need to be encouraged. The performance evaluation targets of the restricted stock incentive plan are as follows: 1) the target value: the income in 2024 and 2025 will increase by 30% year-on-year or the home net profit will increase by 20% over the same period last year. The unlocking ratio is 100%. The unlocking ratio is 100%. 2) trigger value: revenue in 2024 and 2025 increased by 15% year-on-year or return net profit increased by 10% year-on-year, one can be achieved, and the unlocking ratio is 80% 100%, depending on the overcompletion. The implementation of the equity incentive plan is expected to fully mobilize the enthusiasm of the core staff, so as to add impetus to the company's performance growth.

Investment advice: only considering endogenous growth, we expect the company to achieve income of 8.10,9.78 and 1.179 billion yuan respectively from 2024 to 2026, and net profit of 1.31,1.62 and 203 million yuan respectively, which is + 21.77%, + 23.38% and + 24.96% respectively compared with the same period last year. The dynamic PE from 2024 to 2026 is 49.49,40.11,32.10 times respectively, maintaining the "buy" rating.

Risk analysis.

1) the progress of high-end products is not as expected.

Due to the late start of domestic enterprises in the field of general electronic testing and measurement, and the short time of technology accumulation, there is still a large gap between domestic enterprises and foreign dominant enterprises in product layout and technology accumulation, and the product structure is mainly concentrated in the middle and low end. If the company fails to launch high-end products as expected or the sales of high-end products are lower than expected, it will affect the core competitiveness of the company, and then adversely affect the profitability of the company.

2) Import dependence risk of electronic components

The design and processing level of electronic components directly affect the performance of the company's products. Some high-end electronic components in the company's raw materials, such as IC chips and high-precision resistors, need to use imported products, and there are few domestic products with the same performance. If there are major adverse changes in the international trading environment, or if the production capacity of foreign manufacturers is limited, the company will face the risk of shortage of raw materials or fluctuations in procurement prices.

3) potential risks arising from litigation matters

The electronic measuring instrument industry belongs to the high-tech industry, the iterative speed of products and technology is fast, and there may be patent-related litigation matters among competitors in the same industry. If the company loses in the lawsuit, it may face potential risks such as the failure of a patent application or reputation risk.