HCNC(SZ:300161) Soochow Securities·2024-08-28 10:30Investment Rating - The report maintains an "Accumulate" rating for the company [1] Core Views - The company's revenue has faced short-term pressure, primarily due to a significant decline in income from industrial robots and intelligent production lines, leading to a year-on-year revenue drop of 29.02% in H1 2024 [1] - Despite the revenue decline, the company has a substantial backlog of orders, with contract liabilities increasing by 55.43% year-on-year, indicating strong future revenue potential [1] - The company continues to invest heavily in R&D, which has resulted in a net loss of 1.07 billion yuan in H1 2024, an increase from a loss of 0.35 billion yuan in H1 2023 [1] Summary by Sections Revenue and Profitability - In H1 2024, the company achieved total revenue of 629 million yuan, with a net profit attributable to shareholders of -107 million yuan, reflecting an expanded loss compared to the previous year [1] - The revenue breakdown shows that the CNC systems and machine tools segment generated 383 million yuan, a 3.89% increase year-on-year, while the industrial robots and intelligent production lines segment saw a 57.82% decline in revenue [1] Margin and Expenses - The gross margin improved to 34.75%, up 4.43 percentage points year-on-year, but the net profit margin was -20.39%, down 15.82 percentage points [1] - The company's expense ratio increased to 59.37%, with significant rises in sales, management, and R&D expenses, contributing to the wider losses [1] Order Backlog and Inventory - As of the end of H1 2024, the company's contract liabilities stood at 339 million yuan, indicating a robust order backlog [1] - The inventory of work-in-progress increased by 136% year-on-year to 190 million yuan, suggesting that many orders are in execution and may lead to future revenue recognition [1] R&D and Capital Expansion - The company is focusing on overcoming challenges in the CNC system sector, with 78 patents and 37 software copyrights obtained during the reporting period [1] - A planned capital increase of 1 billion yuan aims to enhance production capacity and support long-term growth initiatives [1] Earnings Forecast and Valuation - The profit forecasts for 2024-2026 have been adjusted downwards due to short-term revenue pressures, with expected net profits of 890 million yuan, 1.34 billion yuan, and 1.83 billion yuan respectively [1] - The current stock price corresponds to dynamic P/E ratios of 46, 31, and 22 times for 2024, 2025, and 2026 respectively, reinforcing the company's position as a rare asset in the high-end CNC system sector [1]